The interest rate mis-selling scandal took another twist recently when a landmark legal case was dismissed by the High Court. Had the case been successful it would have challenged the banks’ £2.1bn compensation scheme set-up to settle inappropriate interest rate swaps – however the decision only brings temporary relief for the banks.
Background
On January 4, 2016, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) deviated from SDNY precedent and held that, despite the absence of clear Congressional intent, the avoidance powers provided for under Section 548 of the Bankruptcy Code can be applied extraterritorially. As a result, a fraudulent transfer of property of a debtor’s estate that occurs outside of the United States can be recovered under Section 550 of the Bankruptcy Code.
During the previous UK government’s tenure, in March 2015 a call for evidence was launched to understand better the employee consultation process when an employer faces insolvency, restructure or other form of company rescue (Call for Evidence on Collective Redundancy Consultation for Employers facing Insolvency).
The call for evidence sought views on the following areas:
On December 14, 2015, the United States Court of Appeals for the Second Circuit held that claims arising from securities of a debtor’s affiliate must be subordinated to all claims or interests senior or equal to claims of the same type as the underlying securities in the bankruptcy proceeding.
On October 28, 2015, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) issued a decision that significantly expands the jurisdictional bases that foreign issuers can rely upon to obtain relief in the United States under Chapter 15 of the Bankruptcy Code.
Further to the review of pre-pack administration sales (“pre-packs”) by Teresa Graham CBE last year (the findings of which were published in the “Graham Report” and discussed in one of our earlier blogs,Change in Sight for UK Pre-pack Administration Regulation), the key recommendations have now been implemented in order to improve fairness and transparency especially where a pre-pack sale occurs to a connected party.
New guidance from the Pension Protection Fund (PPF) regarding pre-packaged administrations (pre-packs) outlines their approach to pre-packs when the same insolvency practitioner (IP) proposes to continue as office holder in any subsequent liquidation or company voluntary arrangement (CVA).
On June 29, 2015, the United States Court of Appeals for the Second Circuit affirmed the decision of the United States Bankruptcy Court for the Southern District of New York, which held that claims asserted by counterparties in relation to bilateral repurchase agreements do not qualify for treatment as customer claims under the Securities Investor Protection Act of 1970 (“SIPA”).
In a May 4, 2015 opinion1 , the United States Supreme Court held that a bankruptcy court order denying confirmation of a chapter 13 repayment plan is not a final order subject to immediate appeal. The Supreme Court found that, in contrast to an order confirming a plan or dismissing a case, an order denying confirmation of a plan neither alters the status quo nor fixes the rights and obligations of the parties. Although the decision arose in the context of a chapter 13 plan, it should apply with equal force to chapter 11 cases.
A recent English High Court decision has further clarified the position on what amounts to an “abuse of process” when it comes to determining the motive behind the presentation of a winding up petition by a creditor. The High Court has ruled that only where a petition is issued for a purpose other than to ensure the equitable winding-up of a debtor company can it be considered an “abuse of process”, and goes on to outline what may constitute such an abuse.