The amendments to the Insolvency Act 1986 will extend the protection of essential supplies on insolvency to most private utility suppliers. They will also extend protection to I.T. supplies, including data storage and processing and website hosting. Further protection is introduced where contracts are entered into from 1 October 2015, so that insolvency related terms which allow higher supply charges in the event of administration or company voluntary arrangement will be prohibited.
Why is the law changing?
The courts continue to pick away at the “unfinished business rule.” The latest blow came earlier this month when a U.S. district court dismissed a Chapter 7 trustee’s claims against eight law firms who provided services to former clients of Howrey LLP. We are getting close to the point where the unfinished business rule may in fact be finished.
As we reported in April, the Insolvency Service has issued a call for evidence inviting comments on the issues with, and improvements that could be made to, the collective redundancy consultation requirements for employers facing insolvency. The Government has been seeking views on how well the requirements work both before an insolvency practitioner has been appointed to the failing company and after a formal appointment has been made.
How far do the Bankruptcy Code’s “safe harbor” provisions extend in the commercial mortgage-backed securitization (CMBS) market? Do these safe harbor provisions protect financial institutions that act merely as conduits for CMBS payments? These questions were addressed recently by the Northern District of Illinois District Court, and the court’s decision provides ammunition for CMBS investors in clawback claims brought by a bankruptcy trustee.
Case: The joint administrators of African Minerals Limited (in administration) v Madison Pacific Trust Limited and Shangdong Steel Hong Kong Zengli Limited (HCMP 865 of 2015)
As we previewed last week, the U.S. Bankruptcy Court for the Southern District of New York recently handed General Motors (“New GM”) an enormous victory that may end up shielding the company from up to $10 billion in successor liability claims.
The bankruptcy court yesterday handed General Motors (New GM) an enormous victory that may end up shielding the company from up to $10 billion in potential legal liabilities. In his 138-page ruling, Bankruptcy Judge Robert Gerber held that a 2009 bankruptcy order allowing the sale of the assets of “old” General Motors (Old GM) to New GM shielded New GM from death and injury claims tied to defective ignition switches in older cars.
Filing an involuntary bankruptcy petition is an alternative not often considered by creditors. However, faced with the possibility of having to write-off a claim, a creditor may choose to file an involuntary bankruptcy petition in order to put the debtor under the control of the Bankruptcy Code and the bankruptcy court. Such a move comes with risk, and a recent Eleventh Circuit Court of Appeals decision may expand that risk.
Events are happening quickly these days with Caesars Entertainment. On January 13, holders of second lien notes issued by Caesars Entertainment Operating Company (“CEOC”) filed an involuntary chapter 11 petition against CEOC in the U.S. Bankruptcy Court for the District of Delaware. Two days later, CEOC itself filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of Illinois, setting up a venue fight over the bankruptcy case. And later that same day, the U.S.