The United States District Court for the District of Delaware recently affirmed a Delaware bankruptcy court case that held that the mutuality requirement of section 553(a)1The case declined to find mutuality in a triangular setoff between the debtor, a parent entity that owed the debtor money, and that entity’s subsidiary, which was a creditor.2
A recent bankruptcy court decision out of the United States Bankruptcy Court for the Central District of California, In re Verity Health Sys. of Cal., Inc., Case No. 2:18-bk-20151 (ER) (Bankr. C.D. Cal. Nov. 27, 2019), is a good reminder of how difficult it is for a purchaser under an asset purchase agreement to get out of the deal by invoking a Material Adverse Effect clause (also known as a Material Adverse Change clause) (an “MAE”).
In a highly anticipated decision issued last Thursday (on December 19, 2019), the United States Court of Appeals for the Third Circuit held in In re Millennium Lab Holdings II, LLC that a bankruptcy court may constitutionally confirm a chapter 11 plan of reorganization that contains nonconsensual third-party releases. The court considered whether, pursuant to the United States Supreme Court’s decision in Stern v. Marshall, 564 U.S. 462 (2011), Article III of the United States Constitution prohibits a bankruptcy court from granting such releases.
As the name suggests, the UNCITRAL Model Law on Cross-Border Insolvency 1997 (Model Law) seeks to address complexities caused where insolvencies cross borders, while leaving substantive insolvency laws of each country largely unaltered. However, as jurisdictions continue to adopt and interpret the Model Law, inconsistencies in its application are coming to light.
In brief...
The use of creditors’ schemes of arrangement is on the rise in Australia. Along the way the Australian courts have made valuable contributions to international scheme jurisprudence. In this article we look at some of these contributions and then explore how Australian law might be further developed to remain a leading jurisdiction for creditors’ schemes.
Advantages of schemes as a restructuring tool
A key part of the international scheme landscape
The use of creditors' schemes of arrangement is on the rise in Australia (as we discussed in our previous article - Update on Creditors Schemes of Arrangement in Australia). Along the way the Australian courts have made valuable contributions to international scheme jurisprudence. In this article we look at some of these contributions and then explore how Australian law might be further developed to remain a leading jurisdiction for creditors' schemes.
The Supreme Court issued its much-anticipated ruling yesterday in the First Circuit case of Mission Product Holdings, Inc. v. Tempnology, LLC, resolving a circuit split that had developed on “whether [a] debtor‑licensor’s rejection of an [executory trademark licensing agreement] deprives the licensee of its rights to use the trademark.” And it answered that question in the negative; i.e., in favor of licensees.
In a recent decision, In re Orexigen Therapeutics, Inc., No. 18-10518 (KG) (Bankr. D. Del. Nov. 13, 2018), Judge Kevin Gross of the United States Bankruptcy Court for the District of Delaware held that the mutuality requirement of section 553 of the Bankruptcy Code must be strictly construed, declining to find mutuality in a triangular setoff between the debtor, a parent entity that owed the debtor money, and that entity’s subsidiary, which was a creditor.
During this mostly quiet week in restructuring, most of us are either away on vacation (think beach or ski) or home for the holidays, maybe back in our hometowns. For me, it’s always the latter, and home for the holidays is Virginia Beach, Virginia, where I sit while I write this blog post (alas, not the beach vacation some of you may be enjoying; my relatives live about 20 minutes from the beach and the high temperature this time of year is usually in the 40s).
In Judge Glenn’s recent lengthy decision recognizing and enforcing a restructuring plan in the chapter 15 proceedings of In re Agrokor1, a Croatian company in Croatian insolvency proceedings, he highlighted that the concept of comity – respect for rulings in other countries – remains an important U.S.