Consumers could be set to jump up the insolvency hierarchy if Parliament backs the latest Law Commission recommendations.
The Law Commission’s report, Consumer Prepayments on Retailer Insolvency, recommends, among other things, that consumers who prepay for goods or services over £250 in the six months prior to a formal insolvency process should be paid out as preferential creditors instead of unsecured creditors.
During contract negotiations parties usually agree what law and which courts will determine any disputes arising from that contract. This brings certainty for the parties. However that certainty can vanish if one party is a foreign registered company and becomes insolvent – the other party may suddenly become exposed to unexpected foreign insolvency law. At this point, the drafting of a jurisdiction clause can be worth millions.
This is the situation in the recent case of Global Maritime Investments Cyprus Limited v O.W. Supply & Trading A/S [2015] EWHC 2690 (Comm).
The Third Parties (Rights Against Insurers) Act 2010 (“TPR”) will finally come into force on 1 August 2016, making it easier for third parties to bring claims against insurers of insolvent companies. It has taken more than six years, spread over three separate governments and was amended even before it came into force, but TPR will finally replace the Third Parties (Rights Against Insurers) Act 1930 (the “1930 Act”).
The Background
Three former directors of failed UK parcel delivery company City Link have recently been delivered the bad news that they will face criminal charges over redundancies made during the Christmas period last year. They have been charged with failure to notify the Secretary of State of the proposed redundancy of City Link’s employees as required under section 193 of the Trade Union and Labour Relations (Consolidation) Act 1992. Notification is normally given to the Government by submitting an HR1 form to the Insolvency Service
The U.S. Court of Appeals for the Seventh Circuit in Chicago has issued a decision with significant implications for licensees of trademarks whose licensors become debtors in bankruptcy. In Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, the Court considered whether rejection of a trademark license in bankruptcy deprives the licensee of the right to use the licensed mark.1 Disagreeing with the holding of the Court of Appeals for the Fourth Circuit in Lubrizol Enterprises, Inc. v.
The Trustee overseeing the liquidation under the Securities Investor Protection Act (“SIPA”) of Lehman Brothers Inc. (“Lehman”) in the U.S. and the Joint Administrator of Lehman Brothers International (Europe) (“LB Europe”) in the U.K. have reached an agreement in principle to resolve $38 billion in asserted claims among Lehman, LB Europe and subsidiaries and affiliates. The agreement is subject to definitive documentation and approval by the Bankruptcy Court in New York and the English High Court. The parties set December 15, 2012 as the deadline to reach a final agreement.
In the Summer 2009 issue of the Legal Canvas, we wrote about the wisdom of filing a UCC financing statement when art work is consigned to a gallery. Specifically, we said that the filing of a financing statement that reflects the consignor’s interest in the work provides protection against the gallery’s creditors. Financing statements take no time to prepare and cost less than $50 to file.
It could be money well spent.
U.S. bankruptcy law permits debtors-in-possession and trustees to sell assets free and clear of claims, liens and other interests. But a federal judge in New York ruled recently that a purchaser does not necessarily buy free and clear when a product manufactured pre-bankruptcy causes injury after a sale closes. Morgan Olson L.L.C. v. Frederico (In re Grumman Olson Indus., Inc.), No. 11 Civ. 2291, 2012 U.S. Dist. LEXIS 44314 (S.D.N.Y. Mar. 29, 2012) (JPO). In this situation, the purchaser can remain liable for injuries caused by the asset purchased from the debtor.
LEHMAN BANKRUPTCY
In re: Lehman Brothers Holdings, Inc., et al., No. 08-13555
On March 6, 2012, Lehman Brothers Holdings Inc. and its affiliated debtors announced that their Modified Third Amended Joint Chapter 11 Plan, which had been confirmed by the United States Bankruptcy Court for the Southern District of New York on December 6, 2011, had become effective. Distributions under the Plan will begin on April 17, 2012.
Earlier today AMR Corporation, its subsidiary American Airlines, Inc., and 18 other affiliates ("Debtors") filed petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York in Manhattan.1 The case was assigned to Bankruptcy Judge Sean H. Lane. The Debtors have asked the Court to consolidate all 20 cases for procedural purposes under the captionIn re: AMR Corporation, Case No. 11-15463.