If bankruptcy proceedings are commenced against a debtor or if a debtor enters into a court-approved composition agreement with an assignment of all of its assets, transactions executed by the debtor during the last five years are subject to scrutiny.
The purpose of claw back claims is to recover assets extracted from or given away by an insolvent debtor for the benefit of its insolvency estate and ultimately its creditors. Transactions may be subject to claw back actions if:
A foreign bankruptcy or insolvency decree has no effects on the debtor’s Swiss assets and on court proceedings against the debtor in Switzerland and a foreign bankruptcy administrator must not act on Swiss soil unless the foreign decree is formally recognized by a Swiss court. Such recognition may be initiated by the foreign bankruptcy administration, any creditor or the debtor itself. This three-step guide describes how a foreign bankruptcy decree can be recognized in Switzerland.
Pre-packs, known as an effective restructuring measure from other jurisdictions, are also permissible in Switzerland.
What is a pre-pack?
A recent decision of the Swiss Federal Supreme Court clarified the question whether a Swiss ancillary bankruptcy estate has standing to contest a schedule of claims of a bankrupt Swiss third-party debtor if the foreign bankruptcy estate filed the respective claims directly and regardless of the recognition of the foreign bankruptcy decree. In essence, the Swiss Federal Supreme Court denied the standing of the ancillary bankruptcy estate as it may in such cases not be considered a creditor of the respective claims.
In Shameeka Ien v. TransCare Corp., et al. (In re TransCareCorp.), Case No. 16-10407, Adv. P. No. 16-01033 (Bankr. S.D.N.Y. May 7, 2020) [D.I. 157], the Bankruptcy Court for the Southern District of New York recently refused to dismiss WARN Act claims against Patriarch Partners, LLC, private equity firm (“PE Firm“), and its owner, Lynn Tilton (“PE Owner“), resulting from the staggered chapter 7 bankruptcies of several portfolio companies, TransCare Corporation and its affiliates (collectively, the “Debtors“).
Joining three other bankruptcy courts, Judge Thuma of the District of New Mexico recently held that the rules issued by the Small Business Administration (“SBA“) that restrict bankrupt entities from participating in the Paycheck Protection Program (“PPP“) violated the Coronavirus Aid, Relief, and Economic Security Act, H.R. 748, P.L. 115-136 (the “CARES Act”), as well as section 525(a) of the Bankruptcy Code.
The Southern District of New York recently reminded us in In re Firestar Diamond, Inc., et al., Case No. 18-10509 (Bankr. S.D.N.Y. April 22, 2019) (SHL) [Dkt. No. 1482] that equitable principles in bankruptcy often do not match those outside of bankruptcy. Indeed, bankruptcy decisions often place emphasis on equality of treatment amongst all creditors and are less concerned with inequities to individual creditors.
Introduction
In Wells Fargo Bank, N.A., f/b/o Jerome Guyant, IRA v. Highland Construction Management Services, L.P. et al., Nos. 18-2450-52 (4th Cir. March 17, 2020), the Fourth Circuit Court of Appeals recently upheld that a borrower’s indirect economic interests in a limited liability company (LLC) were not assigned to a lender under a conveyance in a security agreement assigning mere membership interests, pursuant to Virginia state law.
Facts
Setoff is a right that allows a creditor to offset a prepetition debt owed to a debtor with its prepetition claim against the debtor. See In re Luongo, 259 F.3d 323, 334 (5th Cir.