Puerto Rico Oversight, Management, and Economic Stability Act

The watchword for 2016 in much of the world was "upheaval." Two unanticipated events dominated the political, business, and financial headlines of 2016, at least in Europe and the Americas: the Brexit referendum result and the election of Donald J .Trump as the 45th President of the United States. The refugee crisis, the commodities meltdown, Brazil’s economic collapse, China’s growing pains, Russian belligerency and alleged cyber-meddling in the U.S. election, the war on terrorism, and the beginning of the end of the bloody Syrian civil war seemed to pale by comparison.

Horton v Henry: Pensions clarified

We previously discussed the uncertainty surrounding the treatment of pensions in a bankruptcy which arose from two conflicting high court decisions: Raithatha v Williamson [2012] EWHC 909 (Ch) and Horton v Henry [2014] EWHC 4209 (Ch).

In Hinton v Wotherspoon [2016] EWHC 623 (CH) (where this firm successfully represented the trustee in bankruptcy, Lloyd Hinton of Insolve Plus Limited), the court commented that the approach in Horton v Henry [2014] EWHC 4209 (Ch) was “plainly correct”.

FACTS:

InHinton v Wotherspoon [2016] EWHC 623 (CH), Jason Freedman and Aziz Abdul successfully secured an Income Payments Order (“IPO”) on behalf of the Trustee in Bankruptcy.

The court also provided useful guidance on the correct position where a bankrupt has made an election to draw down from his private pension but not given specific instructions as to application of the funds.

LEGAL BACKGROUND:

The world’s second-largest economy (China) stumbled; Japan receded; the U.K. showed signs of life; the war-torn Middle East reeled; oil revenue-dependent Russia, Brazil, and Venezuela took body blows; and the European Union exhaled after narrowly avoiding Grexit (and possibly Brexit), only to confront a refugee crisis of alarming (and expensive) proportions, as well as a demonstrated terrorist threat from the self-proclaimed Islamic State.

A Good Year for the U.S.

A “structured dismissal” of a chapter 11 case following a sale of substantially all of the debtor’s assets has become increasingly common as a way to minimize costs and maximize creditor recoveries. However, only a handful of rulings have been issued on the subject, perhaps because bankruptcy and appellate courts are unclear as to whether the Bankruptcy Code authorizes the remedy.

Stevensdrake Ltd v Stephen Hunt & Others [2015] EWHC 1527 (Ch)

Introduction

The High Court’s recent judgment in Stevensdrake Ltd -v- Stephen Hunt & Others highlights the need for Insolvency Practitioners to make sure that they carefully review conditional fee arrangements before entering into them and understand the potential contractual ramifications which may give rise to personal liability.

Background

Even after the U.S. Supreme Court in RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S. Ct. 2065 (2012), pronounced in no uncertain terms that a secured creditor must be given the right to “credit bid” its claim in a bankruptcy sale of its collateral, the controversy over restrictions on credit bidding continues in the courts. A ruling recently handed down by the Fifth Circuit Court of Appeals has added a new wrinkle to the debate. InBaker Hughes Oilfield Operations, Inc. v. Morton (In re R.L. Adkins Corp.), 2015 BL 116996 (5th Cir. Apr.

Debt-for-equity swaps and debt exchanges are common features of out-of-court as well as chapter 11 restructurings. For publicly traded securities, out-of-court restructurings in the form of "exchange offers" or "tender offers" are, absent an exemption, subject to the rules governing an issuance of new securities under the Securities Exchange Act of 1933 (the "SEA") as well as the SEA tender offer rules.

Compared to much of the rest of the world, the United States had the most positive economic, business, and financial news in 2014.