Following an informal consultation in late 2008, the DWP is now consulting formally about changes to the Employer Debt Regulations made under s75 Pensions Act 1995. The consultation document can be found at www.dwp.gov.uk/consultations/2009.
The main proposed changes are intended to facilitate corporate restructurings, but other changes are designed to address some technical problems with the Regulations.
Corporate restructurings
In a recent case1, the High Court concluded that it was right to sanction schemes of arrangement which formed part of a wider debt restructuring that excluded out-of-the-money junior creditors. In doing so, it valued the distressed companies on a going concern basis.
Background
Supply chain finance products have a well-deserved reputation of being fairly low risk propositions. The majority of facilities are uncommitted, exposures are typically short-term and many counterparties are highly rated and well capitalized.
As courts across the country deal with scaled back operations due to the COVID-19 pandemic, bankruptcy courts in New Jersey and Delaware have issued novel orders to address the impact of the virus on certain debtors. Last month, debtors in the chapter 11 bankruptcy cases of Modell’s Sporting Goods, Inc. and CraftWorks Parent, LLC each sought and obtained court orders suspending certain case activity which, for all intents and purposes “mothballed” the cases for a certain period of time.
The economic impact of the COVID-19 coronavirus remains uncertain, but many are preparing for an up-tick in bankruptcies and, in particular, 363 transactions – sales of assets pursuant to Section 363 of the US Bankruptcy Code. Here are some practical steps that can help you prepare for your own 363 process and finding your stalking horse.
The below chart summarizes the modifications to certain protocol and procedures of major US Bankruptcy Courts in light of the recent COVID-19 outbreak. At the moment, the chart includes the US Bankruptcy Courts for the District of Delaware, the Southern District of New York, the Northern District of Illinois, the Eastern District of Virginia, and the Southern District of Texas. Mayer Brown will continue to monitor the situation in the days and weeks to come, and will update the chart accordingly.
BANKRUPTCY COURT
STATUS
ACCESS & ENTRY RESTRICTIONS
With a slowdown in capital markets activity and sharply decreased economic activity, the pressures on borrowers (and therefore their lenders) are only going to increase in the near term.
Last summer, my colleague C.J. Summers and I posted a report about Saccameno v. U.S. Bank National Association, a Seventh Circuit case in which we had filed an amicus brief on behalf of the Chamber of Commerce of the United States.
Last October we highlighted an important ruling issued in September 2019 by the Seventh Circuit in the bankruptcy proceeding of In re I80 Equipment, LLC.
On December 19, 2019, the US Court of Appeals for the Third Circuit held in In re Millennium Lab Holdings II, LLC1that bankruptcy courts have the constitutional authority, well within the constraints of Stern v.