The safe harbor protection of Bankruptcy Code (“Code”) §546(e) does not protect “transfers that are simply conducted through financial institutions,” held the U.S. Court of Appeals for the Seventh Circuit on July 28, 2016. FTI Consulting Inc. v. Merit Management Group LP, 2016 WL 4036408, *1 (7th Cir. July 28, 2016).

Bankruptcy courts may hear state law disputes “when the parties knowingly and voluntarily consent,” held the U.S. Supreme Court on May 26, 2015. Wellness Int’l Network Ltd. v. Sharif, 2015 WL 2456619, at *3 (May 26, 2015). That consent, moreover, need not be express, reasoned the Court. Id. at *9 (“Nothing in the Constitution requires that consent to adjudication by a bankruptcy court be express.”). Reversing the U.S.

The U.S. District Court for the Southern District of New York, on May 4, 2015, affirmed U.S. Bankruptcy Judge Robert D. Drain’s decision confirming the reorganization plan for Momentive Performance Materials Inc. and its affiliated debtors.1 The Bankruptcy Court’s decision was controversial because it forced the debtors’ senior secured creditors to accept new secured notes bearing interest at below- market rates.

Of general interest is the appeal in the case of Horton v Henry, on which we reported in our January 2015 update. In Horton, the High Court declined to follow a previous ruling, and decided that a bankrupt could not be compelled to access his pension savings to pay off creditors.

Declining to follow a 2012 decision, the High Court has ruled that a bankrupt’s unexercised rights to draw his pension did not represent income to which he was entitled within the meaning of the Insolvency Act 1986, and so did not form part of the bankruptcy estate.

Background

Following the Dec. 8 publication by the American Bankruptcy Institute (“ABI”) Commission to Study the Reform of Chapter 11 of a report (the “Report”) recommending changes to Chapter 11 of the Bankruptcy Code (“Code”),[1] we continue to analyze the proposals contained in the ABI’s 400-page Report. One proposal we wanted to immediately highlight would, if adopted, significantly increase the risk profile for secured lenders.

The American Bankruptcy Institute (“ABI”) Commission to Study the Reform of Chapter 11 issued today a 400-page report (the “Report”) recommending changes to Chapter 11 of the Bankruptcy Code (“Code”). The Report is the result of a two-year effort by 150 practitioner-ABI members.[1] Without considering the likelihood of Congressional passage in the near term, we will evaluate each significant proposed change separately in subsequent Alerts over the next several weeks.

The U.S. Court of Appeals for the Fifth Circuit, on Oct. 16, 2014, held that a “good faith transferee” in a fraudulent transfer suit “is entitled” to keep what it received “only to the extent” it gave “value.” Williams v. FDIC (In re Positive Health Management), 2014 WL 5293705, at *8 (5th Cir. Oct. 16, 2014). Reversing in part the district and bankruptcy courts, the Fifth Circuit narrowed their holding that the debtor had “received reasonably equivalent value in exchange for the debtor’s cash transfers.” Id. at *1-2.

On Aug. 26, 2014, Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York denied the payment of a $200 million make-whole premium. See Corrected and Modified Bench Ruling on Confirmation of Debtors’ Joint Chapter Plan of Reorganization for Momentive Performance Materials Inc. and its Affiliated Debtors, In re MPM Silicones, LLC, No. 14-22503 (Bankr. S.D.N.Y. Sept. 9, 2014) [D.I.

Again, of interest to all schemes providing defined benefits is the recent settlement in the litigation involving the Lehman Brothers Scheme, where the payment of £184 million, representing costs of the buying-out benefits, has been agreed.

Following a detailed investigation by TPR commencing in 2008, and a legal battle through the hierarchy of courts up to the Supreme Court (SC), members of the Lehman Brothers Pension Scheme will receive their full benefits after a settlement was reached on 18 August 2014.