As 26 June 2017 approaches – the date of entry into effect of the Recast EU Insolvency Regulation (2015/8484/EU) – we look in detail at the new provisions for co-ordinating the insolvency proceedings of members of a pan-European group of companies and consider whether the new proposals for co-operation will be compulsory, the practicalities of who will pay the co-ordinator’s fees and whether the creditors can have a say in the process. Continue Reading
The Insolvency Rules (England and Wales) 2016 (“IR2016”) came into force on 6 April 2016 applying to most corporate and personal insolvency regimes in England and Wales. However, there is still unfinished business for the Government and further regulation is expected to be introduced later this year to ensure the changes apply uniformly in all areas. Continue Reading
Earlier this month, the United States Supreme Court agreed to review a Seventh Circuit decision regarding the scope of the so-called “safe harbor” from avoidable transfers provided in Section 546(e) of the Bankruptcy Code. Many in the U.S. bankruptcy industry expect that the Supreme Court granted certiorari to hear Merit Management Group, LP v. FTI Consulting, Inc., Case No. 16-784, in order to resolve a long-running split among the 2nd, 3rd, 6th, 8th, and 10th Circuits, on the one hand, and the 7th and 11th Circuits on the other.
The basic issue in Merit is whether Section 546(e) protects an otherwise-avoidable transfer made by or to a financial institution, whether or not the institution has a beneficial interest in the property transferred. Understanding how the Section 546(e) safe harbor protects certain transfers requires a familiarity with (a) preferential transfers under Section 547(b), which allows a debtor-in-possession or a trustee to avoid certain transfers made within 90 days of a debtor’s bankruptcy filing, and (b) fraudulent transfers under both Section 548, which allows avoidance of constructively or actually fraudulent transfers made to or for the benefit of an insider of the debtor within two years of the bankruptcy filing, and Section 544 which incorporates state fraudulent transfer statutes. Continue Reading
With Christmas a distant memory, Easter and the first quarter of 2017 behind us and summer and a General Election just around the corner, how are UK retailers shaping up?
You will be aware that 2016 saw many well-known retailers fall upon hard times, not least BHS amidst great controversy, Austin Reed the office-wear retailer and Brantano the value shoe maker (to name just a few) each entering administration. The question is whether this trend in retail hardship is set to continue in 2017? Continue Reading
In an opinion by Judge Roth issued on March 30, 2017, the Court of Appeals for the Third Circuit held that two suppliers who had sold electrical materials to a bankrupt contractor had violated the automatic stay by asserting a construction lien against the owner of the development where the contractor had installed the materials supplied.
Cooper Electrical Supply Co. and Samson Electrical Supply Co. (the “suppliers”) sold Linear Electric Co., Inc. various electrical materials, which Linear incorporated into several construction development projects. The development owners had not fully paid Linear for its work on these projects, and Linear had not fully paid the suppliers for their materials. Linear filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, and two weeks later the suppliers filed construction liens on the property owned by the developers.
When reviewing a security for costs application under CPR 25.12, the courts are faced with the challenge of striking a balance between an impecunious claimant’s access to justice and the possibility of a successful defendant being unable to recover their costs. This is because the general rule in relation to costs under CPR 44.2 is that the unsuccessful party will pay the costs of the successful party.
However, a recent decision in the Chancery Division of the High Court has tipped the scales in favour of claimants with ATE insurance in security for cost applications – the case of Premier Motorauctions Limited (in liquidation) v PWC LLP.
Last month Bankruptcy Judge Isacoff in the Southern District of Florida held that a foreign representative may bring state law and foreign law avoidance actions notwithstanding section 1521(a)(7) of the Bankruptcy Code.
The case, Laspro Consulores LTDA v. Alinia Corp. (In re Massa Falida Do Banco Cruzeiro Do Sul S.A.), deals with the fraudulent activity of the owners and managers of the Brazilian Bank, Banco Cruzeiro Do Sul S.A. (“BCSUL”). In 1993, the Indio da Costa family took ownership of BCSUL. Luis Octavio Indio da Costa and Luis Felippe Indio da Costa (together, the “Indio da Costas”) were primarily responsible for the bank’s management. The Central Bank of Brazil seized control of BCSUL in 2012 and placed it into extra-judicial liquidation. In 2014, the liquidator obtained recognition of the Brazilian insolvency proceeding as a foreign main proceeding in the Bankruptcy Court for the Southern District of Florida. In August 2015, the Brazilian Bankruptcy Court decreed the bankruptcy of BCSUL and in January 2016, Laspro Consulores LTDA was appointed trustee and presently serves as the foreign representative of BCSUL (the “Foreign Representative”).
This Monday, the U.S. Supreme Court rejected General Motors’ petition for a writ of certiorari, which GM filed in an attempt to overturn a ruling by the Second Circuit Court of Appeals related to the sale of substantially all of GM’s assets in bankruptcy. When we last visited the case in a prior blog post, GM’s petition to the Supreme Court was still pending. With no prospect of Supreme Court review, the exception to the “free and clear” provisions of a sale under Section 363 of the Bankruptcy Code, adopted in the Second Circuit’s opinion, remains the law of the land.
The Supreme Court’s denial of certiorari further reinforces the importance to parties and bankruptcy practitioners to fully disclose potential liabilities in the bankruptcy process. As the GM case demonstrates, failure to make complete disclosures and provide proper notice to all creditors may severely limit or even eliminate the protections a purchaser of the estate’s assets would otherwise enjoy under the “free and clear” provisions of Section 363. And the resulting post-sale liability for pre-sale conduct could be quite substantial.
As of 25 April 2017, for courts within the Chancery division of the High Court in London, the filing of all applications, forms and documents must be performed electronically. This includes the Bankruptcy and Companies Courts within Greater London. It does not apply to the High Courts outside London.
Where once a lawyer might expect to physically go to court to have their documents stamped, the entire process is now controlled by the courts’ new CE-Filing process. An update to Practice Directive 510 (PD510) that governs electronic filings is due to be published imminently. The Courts working out of the Rolls Building have attempted to provide a service that operates 24 hours a day, 365 days a year which will not only incidentally do away with the need for out of hours filings but is intended to streamline the entire process of filings at court. Continue Reading