We’ve heard it all before: re-running arguments in bankruptcy proceedings

I will not copy againThe Court of Appeal in Harvey v Dunbar Assets plc [2017] EWCA Civ 60 has confirmed that parties cannot re-litigate failed arguments that have previously been presented in bankruptcy proceedings.

This will be welcome news for creditors in situations where debtors rehearse the same arguments at several stages of the bankruptcy process in an attempt to deter enforcement by driving up legal costs and drawing out proceedings. Continue Reading

Jevic Holding: The Supreme Court Puts an End to Non-Consensual Structured Dismissals That Violate Bankruptcy Code Priority Scheme

Road Stop SignYesterday, the Supreme Court issued is highly awaited ruling in Czyzewski et al. v. Jevic Holding Corp. et al.  The Jevic case presented the question whether bankruptcy courts may approve non-consensual structured dismissals that vary the distribution scheme established by the Bankruptcy Code.  With Justice Breyer writing for the majority, the Court held that bankruptcy courts may not approve structured dismissals that provide for distributions that run afoul of the Code’s priority rules without the consent of affected creditors.  The Court’s ruling is sure to have a dramatic impact upon Chapter 11 cases and is certainly required reading for bankruptcy and restructuring professionals.

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Taxation of restructuring profits – a new and unexpected obstacle for restructurings in Germany

Lifebuoy and BusinessmanThe question whether restructuring profits are taxable or not has been answered differently in Germany in the past. However, on 7 February 2017, a decision of the Grand Senate of the Federal Fiscal Court (the “FFC Decision”) was published, in which the highest German tax court declared the Restructuring Decree as unlawful. The FFC found that the administration had acted as legislator violating its obligation to apply the existing law. The FFC Decision has far-reaching consequences not only for future restructurings, but also raises the question who may rely on the Restructuring Decree for past restructurings.

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Protecting Committee Members – Ninth Circuit Expands Protections Afforded to Individual Committee Members

In a recent opinion, the United States Court of Appeals for the Ninth Circuit expanded the protections afforded to individual members of an official creditors’ committee against certain lawsuits.  Specifically, in In re Yellowstone Mountain Club, LLC, 841 F.3d 1090 (9th Cir. 2016), the Court unanimously held that the Barton doctrine (also known as the prior leave requirement) applies to lawsuits brought against individual members of an official creditor committee for actions taken in their official capacities.

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Rules of Engagement for Creditors – New Insolvency Rules In Force 6 April 2017

On 6 April 2017, the new Insolvency Rules come into force which will affect creditors’You Snooze You Lose - Newspaper Headline rights in most insolvency procedures. The changes are designed to ensure insolvency processes are as efficient and streamlined as possible in order to maximise returns to creditors by reducing costs whilst retaining safeguards to avoid abuse or injustice.

Whether you are faced with an insolvent customer, client, supplier, tenant or other debtor, you will need to know about the key changes to the rules. This article highlights the important changes affecting your rights as a creditor. Continue Reading

But I Didn’t DO Anything! — Can Non-action Violate the Automatic Stay?

Businessman Shrugging Shoulders

It is commonly understood that, upon commencement of a bankruptcy case, section 362 of the Bankruptcy Code operates as an automatic statutory injunction against a wide variety of creditor actions and activities. The automatic stay enjoins (1) “commencement or continuation” of certain proceedings, (2) “enforcement” of a judgment, (3) “any act” to obtain possession of or exercise control over property, (4) “any act” to create, perfect or enforce a lien, (5) “any act” to collect assess or recover claim, (6) “set off” of any debt, and (7) “commencement or continuation” of certain tax proceedings. All of these elements speak in terms of preventing actions that might otherwise be taken by the party against whom the automatic stay operates.

However, are there instances in which non-action by a creditor can violate the automatic stay? The Tenth Circuit recently addressed this issue in WD Equipment LLC v. Cowen (In re Cowen) (“Cowen”). Its decision added to a split among the Circuits on whether non-action can constitute an automatic stay violation.

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Reality Check for Rates Liability

Internal RenovationThe construction industry has never been a stranger to insolvency. There are many factors for insolvency practitioners appointed over a part complete site to consider – security issues, engaging with contractors, creditors and suppliers at the earliest opportunity, not to mention the potential health and safety exposure. The insolvency practitioner will also need to make a decision as to whether to complete a development over which they are appointed or sell the site in whatever unfinished state it is in. In making this decision, the cost of any build out versus the realisations that could be achieved on a part complete site, as opposed to a completed development, will be a huge consideration for any insolvency practitioner. The recent Supreme Court decision of Newbigin (Valuation Officer) v S J & J Monk may offer some assistance in the insolvency practitioner’s deliberations.

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Czech Republic – Insolvency Law Changes from 1 July 2017

Czech Republic MapA significant amendment to the Czech Insolvency Act will take effect on 1 July 2017. It has been stated that the main aim of the amendment is to introduce measures against so called “insolvency mafia” and regulate consultancy services providers in connection with solving personal debts. The amendment brings changes to rules for personal bankruptcies, which are to be solved through a discharge from debts.

There are also provisions which shall not be overlooked by corporations, both on the debtor – as well as the creditor – side, such as prohibition of forum shopping (insolvency tourism), restriction of voting rights of the creditors from the debtor’s group, provisions against “bullying” insolvency petitions, stricter rules for documenting the existence of a claim when filing creditor’s insolvency petitions, etc. Continue Reading

A Long Road Trip: The GM Bankruptcy Saga Continues

In a prior blog post, we discussed the Second Circuit Court of Appeals’ reversal of the bankruptcy court in In re General Motors.  In its opinion, the Second Circuit held that a sale of assets without proper notice to potential plaintiffs with defect claims violated the plaintiffs’ due process rights and resulted in a sale to “New GM” that was not, in fact, “free and clear” of those claims.  Recently, with the case remanded, and with a petition for a writ of certiorari pending before the U.S. Supreme Court, the bankruptcy court ordered briefing on several threshold issues.  These issues include (a) how potential plaintiffs should be grouped between ignition-switch plaintiffs and non-ignition-switch plaintiffs, (b) whether non-ignition-switch plaintiffs can bring independent claims against New GM, (c) what role the bankruptcy court should have in those claims, and (d) what rights used-car buyers have against New GM. Continue Reading

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