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.
In Short
The Situation: In February 2020, amendments to the Corporations Act 2001 (Cth) expanded the kinds of transactions that may be voidable if a company is being wound up to include asset disposals undertaken as part of illegal phoenixing schemes. Such disposals are termed as "creditor-defeating dispositions" in the legislation.
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
In Short
The Situation: In the recent decision of Morton as Liquidator of MJ Woodman Electrical Contractors Pty Ltd v Metal Manufacturers Pty Limited [2021] FCAFC 228, the Full Court of the Federal Court of Australia considered the availability of mutual set-off provisions in s 553C the Corporations Act 2001 (Cth) as a defence to unfair preference claims.
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 Short
The Situation: The Full Court of the Federal Court has changed industry practice in Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) [2021] FCAFC 64 by holding that the "peak indebtedness rule" is not available to liquidators when assessing the value of running accounts in unfair preference claims.
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.
In Short
The Situation: When determining and quantifying unfair preference claims in Australia, does the Corporations Act permit liquidators to value transactions forming part of a single "continuous business relationship" (such as a running account) from the point of peak indebtedness, even if doing so disregards earlier transactions that might act to reduce the value of the claim against the creditor?
The nearly $350 billion loan program made available to small businesses by the Coronavirus Aid, Relief, and Economic Security (CARES) Act was tapped out in less than two weeks. In response to this overwhelming demand, on Friday, April 24, 2020, an additional $320 billion was funded into the loan program, and the second round of applications for small businesses requesting these loans will open on Monday, April 27, 2020.
In Short
The Situation: The economic impact of the COVID-19 pandemic has required governments around the world to provide temporary relief to companies and directors experiencing distress as a consequence of the pandemic.