Whose crytpo is it? With the multiple cryptocurrency companies that have recently filed for bankruptcy (FTX, Voyager Digital, BlockFi), and more likely on the way, that simple sounding question is taking on huge significance. Last week, the Bankruptcy Court for the Southern District of New York (Chief Judge Martin Glenn) attempted to answer that question in the Celsius Network LLC bankruptcy case.
While the Judge-made doctrine of equitable mootness continues to beguile and often stymie parties-in-interest seeking to appeal an order confirming a chapter 11 plan (as well as other orders which are on appeal prior to confirmation of a plan), appellants in the Fifth Circuit can continue to rest assured that the doctrine will be applied only as a “scalpel rather than an axe.” That is because in the Fifth Circuit, the doctrine—which can be described as a form of appellate abstention—is applied only on a claim-by-claim, instead of appeal-by-appeal basis.
The long awaited Sequana Supreme Court judgment[1] has provided some welcome clarity around the duties of the directors of a company in the "twilight zone" – i.e. where the company is facing financial difficulties.
As outlined in our previous briefing note on the Corporate Insolvency and Governance Act 2020, a new restructuring tool was introduced in June 2020 in the form of the Part A1 free-standing moratorium (the "Moratorium").
We have written many times over the past few years about how the bankruptcy courts are off-limits to state-legalized cannabis businesses. This past year brought no new relief to the cannabis industry, and the doors to the bankruptcy courts remain shut. Are the other federal courts off-limits as well? A recent district court decision from the Southern District of California sheds some light on this issue, and indicates that the district courts are at least partially open to participants in legal cannabis businesses.
Factual Background
The High Court has dismissed a challenge to Caffe Nero's company voluntary arrangement (CVA) in Young v Nero Holdings Limited. The Applicant in the proceedings, Mr Young, was a landlord of premises let to the First Respondent, Nero Holdings Limited (the Company) and challenged the Company's CVA under s 6(1)(a) and (b) of the Insolvency Act 1986 (the Act).
Here we go again – proposed bankruptcy venue legislation is back after previous “reform” efforts came up empty. For those seeking legislative action, what are the chances for venue reform now?
In response to the COVID-19 pandemic, legislation was introduced during 2020 to prevent creditors filing statutory demands and winding up petitions on the basis of their debtor's inability to pay its debts, unless it could be shown that non-payment was not a result of the pandemic. These temporary measures had been extended a number of times during the pandemic as businesses continued to suffer the effects of multiple lockdowns and trading restrictions, but are now gradually being phased out.
During the pandemic, the UK Government has put legislative measures in place to protect commercial tenants by preventing landlords from using certain remedies such as forfeiture and winding up petitions. However, the legislation does not specifically prevent a landlord from issuing debt claims against its tenants for arrears of rent and other amounts due under a lease (see the recent case of Commerz Real Investmentgesellschaft mbh v TFS Stores Limited [2021] EWHC 863 (Ch)).
In 2020, bankruptcy court doors continued to be shut to cannabis companies. Perhaps most troubling is the continued bar for companies that are only tangentially involved in the state-legalized cannabis industry. Although outlier cases exist, and even though courts have hinted that bankruptcy may be appropriate for some cannabis-related individuals and companies in some situations, there is a consensus now that bankruptcy is generally not available to individuals and companies engaged, directly or indirectly, in the cannabis industry.