In Harrington v. Purdue Pharma LP, in a 5-4 decision, the Supreme Court held that the Bankruptcy Code does not authorize bankruptcy courts to confirm a Chapter 11 bankruptcy plan that discharges creditors’ claims against third parties without the consent of the affected claimants. The decision rejects the bankruptcy plan of Purdue Pharma, which had released members of the Sackler family from liability for their role in the opioid crisis. Justice Gorsuch wrote the majority decision. Justice Kavanaugh dissented, joined by Chief Justice Roberts and Justices Kagan and Sotomayor.

In this client alert, we set out the key findings by the Court of Appeal in Darty Holdings SAS v Geoffrey Carton-Kelly [2023] EWCA Civ 1135, which considers an appeal against the High Court decision that a repayment by Comet Group plc (“Comet”) of £115 million of unsecured intra-group debt to Kesa International Ltd (“KIL”) was a preference under section 239 of the Insolvency Act 1986 (the “Act”).

Background to the Case

The Part 26A Restructuring Plan (“RP”) is a relatively new addition to the English insolvency regime; despite this, the flexibility it provides to both distressed companies and their creditors has made it an important and attractive option. The recent administration of GoodBox Co Labs Limited (“GoodBox”) only further highlights this flexibility, providing ground-breaking precedent for creditor‑led RPs and the necessity of company consent.

In Grant & Ors v FR Acquisitions Corporation (Europe) Ltd & Anor (Re Lehman Brothers International (Europe)) [2022] EWHC 2532 (Ch), the English High Court ruled on an application for directions (the “Application”) made by the administrators (the “Administrators”) of Lehman Brothers International (Europe) (LBIE) relating to the construction and effect of certain bankruptcy-related events of default (“Events of Default”) specified under the ISDA Master Agreements (as defined below), specifically:

Introduction

The Supreme Court of the United Kingdom (“SC”) has recently handed down a decision in the case of BTI v Sequana, dealing with the powers and duties of company directors. The appeal was expected to be of considerable importance.

This alert is especially relevant to companies, and directors of companies, in financial distress, as well as creditors and insolvency practitioners.

Key Takeaways

On July 7, 2022, the UK Insolvency Service, an executive agency of government responsible for a variety of roles in administering the UK insolvency regime, published a consultation on the UK’s proposed adoption of two UNCITRAL Model Laws on insolvency, inviting responses (the “Consultation”).

What happens when a shady businessman transfers $1 million from one floundering car dealership to another via the bank account of an innocent immigrant? Will the first dealership’s future chapter 7 trustee be allowed to recover from the naïve newcomer as the “initial transferee” of a fraudulent transfer as per the strict letter of the law? Or will our brave courts of equity exercise their powers to prevent a most grave injustice?

On 1 August 2022, the English High Court granted the administrators of Petropavlovsk PLC (the “Company”) permission to enter into a sale of its Russian assets to Russian entity UMMC-Invest (the “Proposed Sale”) amidst sanctions concerns.

For background on the Act and the National Security and Investment (NSI) regime, please see our November 2020 Client Alert, August 2021 Client Alert, and