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State Court Receiverships
Administrations, including "pre-packs", are not capable of constituting "insolvency proceedings...instituted with a view to the liquidation of the assets of the transferor" within the meaning of Regulation 8(7) of TUPE. Where there is a sale of an undertaking by an administrator, the employees assigned to the undertaking will automatically transfer to the buyer and receive unfair dismissal protection.
Key facts
In a recent decision, the United States Bankruptcy Court for the Southern District of New York ruled that a certificateholder of two CMBS securitization trusts (“CMBS Trusts”) had no standing to be heard in a chapter 11 case involving the borrowers under a securitized mortgage loan held by the CMBS Trusts.
Earlier this month, the Chapter 7 Trustee (the "Trustee") appointed in the Indalex bankruptcy began filing avoidance actions against various Indalex creditors. For those not familiar with the Indalex bankruptcy, Indalex filed petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware on March 20, 2009. Prior to filing bankruptcy, Indalex was one of the largest aluminum extruders in the United States.
Summary
In the July/August 2010 edition of the Business Restructuring Review, we reported on an important ruling handed down by bankruptcy judge James M. Peck in the Lehman Brothers chapter 11 cases addressing the interaction between the Bankruptcy Code’s general setoff rules (set forth in section 553) and the Code’s safe harbors for financial contracts (found principally in sections 555, 556, and 559 through 562). In In re Lehman Bros. Holdings, Inc., 433 B.R. 101 (Bankr. S.D.N.Y.
The Commonwealth Court of Pennsylvania, which is overseeing the liquidation of the insurer in the coverage dispute, entered an order approving the insurer’s denial of coverage under an excess policy for a $20 million settlement that two individual insureds paid into a Federal Trade Commission (FTC) redress fund. The court adopted the recommendation of the referee appointed to hear the coverage dispute, who applied California law and concluded that the insurer was entitled to summary judgment following briefing and oral argument. Wiley Rein represented the insurer before the referee.
The United States Court of Appeals for the Ninth Circuit has held, under California law, that an insurer had no duty to defend an insured actuarial services firm in litigation alleging that the insured’s reserve reviews and rate level recommendations contributed to the insolvency of a medical malpractice self-insurance fund. Zurich Specialties London Limited v. Bickerstaff, Whatley, Ryan & Burkhalter, Inc., 2011 WL 1118463 (9th Cir. Mar. 28, 2011).
A recent bankruptcy case merits the attention of credit managers and others involved in credit decisions. To avoid credit risk when dealing with a chapter 11 debtor in possession, you must verify that the debtor has court authority to use cash collateral prior to shipping or accepting payment.
In a recent decision, Judge Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware greatly limited debtors’ ability to release parties under a chapter 11 plan in the bankruptcy cases of Washington Mutual, Inc. (“WMI”), and its debtor affiliates (together with WMI, the “Debtors”). In In re Washington Mutual, Inc., Judge Walrath approved a global settlement agreement (the “Global Settlement”) reached by the Federal Deposit Insurance Corporation (“FDIC”) as receiver for Washington Mutual Bank (“WaMu Bank”); JPMorgan Chase Bank, N.A.