This week’s TGIF considers a recent Federal Court of Australia decision (Connelly (liquidator) v Papadopoulos, in the matter of TSK QLD Pty Ltd (in liq) [2024] FCA 888). In the case, it was determined that a restructuring adviser who engineered an asset-stripping scheme may be found liable for the full value of the loss arising out of the scheme.

Key Takeaways

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.

This week’s TGIF summarises the Federal Court of Australia’s recent decision granting leave to proceed against a company despite the appointment of a small business restructuring (SBR) practitioner under Pt 5.3B of the Corporations Act 2001 (Cth) (Corporations Act).

Key takeaways

Introduction

In East-West Logistics LLP v Melars Group Ltd [2022] EWCA Civ 1419 the Court of Appeal once again considered the test for establishing the location of a debtor's centre of main interests (COMI) for the purposes of the Recast Regulation on Insolvency Proceedings 2015/848. The case was a second appeal considering whether to uphold the dismissal of a winding up order on the grounds that the debtor's COMI was not in the United Kingdom.

Oceanfill Ltd v Nuffield Health Wellbeing Ltd and Cannons Group Ltd. [2022] EWHC 2178 (Ch)

A recent decision of the High Court has given helpful clarity on the effects of the UK's restructuring plan procedure on lease agreements and the implications for lease guarantors.

The Virgin Active plan

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?

Summary

Almost a year to the day since the High Court rejected the Amigo loans group's previous proposal for a scheme of arrangement, on 23 May 2022, Mr Justice Trower sanctioned the group's latest scheme proposal which would create the conditions for the group to resume lending and resolve the claims of thousands of the group's customers arising from its lending practices.

A foreign (non-U.S.) company can be dragged unwillingly into a U.S. bankruptcy case if the bankruptcy court has “personal jurisdiction” over the company.

A foreign (non-U.S.) company can be dragged unwillingly into a U.S. bankruptcy case if the bankruptcy court has “personal jurisdiction” over the company.