Tag Archives: Preference

When an Asset is not an Asset

The Court of Appeal has recently considered the status of contingent assets within the balance sheet test for insolvency in the context of a company’s inability to pay its debts. Under Section 123 Insolvency Act 1986, a company is deemed unable to pay its debts if its assets are less than its liabilities including contingent … Continue Reading

Making Sausage – – The Seventh Circuit Examines the “Ordinary Course” Preference Defense

It is relatively rare when a Circuit Court issues an opinion on the preference defenses under section 547(c) of the Bankruptcy Code. It is even more unusual when a decision examines the fact-focused “ordinary course” defense under section 547(c)(2). The ordinary course defense shields payments determined to have been made in the “ordinary course of … Continue Reading

Powerful Changes to UK Insolvency Legislation – Are You Ready?

On 1 October 2015, several changes to UK insolvency legislation are coming into force. Insolvency practitioners and stakeholders should take note of the following key amendments to make sure they are up to date with these changes. The amendments are the next raft of changes to insolvency law under the Small Business Enterprise and Employment Act … Continue Reading

Hey Insiders, the Ninth Circuit Just Gave You a Leg-Up on Avoiding Preference Exposure on Guaranteed Debt

It is already relatively settled that an insider who has personally guaranteed the debt of his or her company may face preference exposure to the extent the guaranteed debt is paid down during the one-year preference period applicable to insiders. Without doubt, such payments directly benefit the guarantor, whose obligation to the primary creditor is … Continue Reading

European Court of Justice Rules on Applicable Law in Cross-border Clawback Proceedings

On April 16, 2015, the European Court of Justice (“ECJ”) provided guidance on the interpretation of Article 13 of the EC Regulation on Insolvency Proceedings (the “Regulation”) in the case Lutz v Bäuerle – C-557/13. Pursuant to Article 4.2 of the Regulation, the general rule is that the law of the Member State where the  insolvency proceedings … Continue Reading

Buyer Beware: Payment on Assumed Debt in An Asset Sale Could Be An Avoidable Preference

Sophisticated distressed investors know the benefits of acquiring assets through a § 363 sale in a bankruptcy case.  The primary benefit, of course, is acquiring assets free and clear of pre-existing liens, claims and interests.  There are some occasions, however, where it is not practical for a buyer to request that a sale be run … Continue Reading