In a case of importance to foreign representatives of foreign debtors seeking the assistance of US courts pursuant to chapter 15 of the Bankruptcy Code, the US Court of Appeals for the Second Circuit has held that the debtor eligibility requirements of section 109(a) of the US Bankruptcy Code apply in cases under chapter 15 as they would in cases under other chapters of the Bankruptcy Code.

Welcome to issue 8 of Global Insight, bringing you reports on breaking legal developments in restructuring law across borders and in jurisdictions around the world. http://viewer.zmags.com/publication/3cb77927#/3cb77927/1

IN THIS ISSUE:CASE LAW · Statutory trust over PAYE deductions continues to operate upon and during liquidation · Setting aside transactions: The good faith defence · Personal liability to liquidators for failure to account for GST refund after default on property purchase · Creditor's resolution to appoint alternative liquidator set aside for prejudice · Liquidators obtain summary judgment for breach of director's duty · Liquidator's disclaimer of lease upheld by Australian High Court · Australian Court holds priority insurance payments

One of the effects of commercial globalization is that the bankruptcy filing of a debtor with transnational business relationships will sometimes result in a clash between the substantive bankruptcy laws of different countries. A frequent question is whether the bankruptcy laws of a foreign country should be brought to bear upon creditors located in the United States, even where foreign bankruptcy law is at odds with the laws of the United States.

The controversial rehabilitation plan for the Segregated Account of Ambac Assurance Corporation (“Ambac”) was recently upheld on appeal in a decision that reached some rather revolutionary conclusions on a wide range of issues affecting various policyholders. The decision by the Court of Appeals of Wisconsin should caution policyholders that they may not have certain basic rights and protections they might expect — including with respect to claims priority — and highlights the great deference given to the insurance commissioner to formulate a plan of rehabilitation.

In the past month, no rulemaking requirement deadlines passed, three rulemaking requirements were finalized and one rule was proposed that would meet four rulemaking requirements. http://www.davispolk.com/sites/default/files/Dec2013_Dodd.Frank_.Progress.Report_0.pdf

In re KB Toys Inc.,1 the US Court of Appeals for the Third Circuit affirmed the holdings of the lower courts that claims subject to disallowance under Section 502(d) of the Bankruptcy Code are “similarly disallowable in the hands of the subsequent transferee.” According to the Third Circuit, when a creditor owes property to the estate, until that property is returned to the estate, that creditor’s claim, regardless of who holds it, is impaired, and the subsequent sale of that claim cannot rid it of its impairment.

The U.S. Court of Appeals for the Third Circuit in In re KB Toys Inc., No. 13-1197, 2013 WL 6038248 (3d Cir. Nov. 15, 2013), held that trade claims that are subject to disallowance under § 502(d) of the Bankruptcy Code in the hands of original claimants are similarly disallowable in the hands of a subsequent transferee of such claims.

The United States Court of Appeals for the Third Circuit recently held that bankruptcy claims subject to disallowance under section 502(d) of the Bankruptcy Code will also be disallowed in the hands of an assignee or purchaser of the claim.

In a decision that demonstrates the potentially broad impact of the forthcoming Supreme Court decision in Bellingham, the Fifth Circuit held that bankruptcy judges may not “determine” non-core matters even where the parties consent. BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), No. 12-51270 (5th Cir. Nov. 11, 2013). This Alert provides an update on the case and discusses the Article III limitations.