The High Court sanctioned Madagascar Oil Limited’s restructuring plan, exercising cross class cram down. The judgment deals with a few now familiar points: what is the relevant alternative? Can it be a different deal? As well as touching on a few novel ones in an unusual two class only plan: was there in fact an in the money class enabling cross class cram down? Almost a third of the judgment is devoted to international recognition and effectiveness of the plan in Madagascar and Mauritius, an unusually detailed analysis, but required here given the specific facts of the case.

Overview

Introduction

On August 26, Indiana Bankruptcy Court Judge Jeffrey J. Graham issued an order in the bankruptcy cases of Aearo Technologies (“Aearo” and, together with its affiliate debtors, the “Debtors”), denying the Debtors’ motion for a preliminary injunction protecting non-debtor parent 3M Company (“3M”) against a slew of litigation related to hearing-protection devices that were allegedly defective and resulted in hearing loss and related injuries.

On August 26, 2020, the Court of Appeals for the Third Circuit held that the Bankruptcy Code does not require subordination agreements to be strictly enforced in order for a court to confirm a cramdown plan, so long as the plan does not discriminate unfairly.

On 28 March 2020, the Business Secretary, Alok Sharma, announced new insolvency measures to support companies under pressure as a result of the COVID-19 outbreak. In summary, the government is due to: (i) implement the landmark changes to the corporate insolvency regime that were announced in August 2018 (as discussed in Weil’s European Restructuring Watch update on 7 September 2018); and (ii) temporarily and retrospectively suspend wrongful trading provisions for three months.

Proposed Changes to the Corporate Insolvency Regime

Background

On 6 March 2020, the restructuring of Doncasters Group's 1.22 billion funded debt was completed. Following a successful non-core disposals program, the Doncasters Group (a leading worldwide supplier of high quality engineered components for the aerospace, industrial gas turbine and specialist automotive industries) operates from 12 principal manufacturing facilities based across the United Kingdom, the United States, Germany, Mexico and China.

On December 19, 2019, the Second Circuit held that appellants’ state law constructive fraudulent transfer claims were preempted by virtue of the Bankruptcy Code’s safe harbors that exempt transfers made in connection with a contract for the purchase, sale or loan of a security from being clawed back into the bankruptcy estate for

On February 25, 2020, the United States Supreme Court in Rodriguez v. Federal Deposit Insurance Corporation^[1] struck down a judicial federal common law rule—known as the Bob Richards rule—that is used by courts to allocate tax refunds among members of a corporate affiliated group where the group does not have a written tax sharing agreement in place, or, at least in some federal Circuits, where an agreement fails to allocate the refunds unambiguously.

On January 14, 2020, the Supreme Court of the United States issued a decision resolving the question of whether a motion for relief from the automatic stay constitutes a discrete dispute within the bankruptcy that creates a basis for a final appealable ruling, or whether it simply is a controversy that is part of the broader Chapter 11 case, such that appeals would not need to be taken until the conclusion of the Chapter 11 case.