THE YEAR IN BANKRUPTCY: 2013
Charles M. Oellermann and Mark G. Douglas
The eyes of the financial world were on the U.S. during 2013. The view was dismaying
and encouraging in roughly equal parts. The U.S. rang in the new year with a postlast-
minute deal to avoid the Fiscal Cliff that kicked negotiations over “sequestration”—$
110 billion in across-the-board cuts to military and domestic spending—two
months down the road, but raised income taxes (on the wealthiest Americans) for
the first time in two decades.
Our government has a longstanding commitment to cutting red tape. One of the ways of doing this it seems is to propose an Act of Parliament running to 153 pages. Thus we are presented with the Deregulation Bill.
A few of the provisions of this Bill relate to insolvency. The most significant are:
The eyes of the financial world were on the U.S. during 2013. The view was dismaying and encouraging in roughly equal parts. The U.S. rang in the new year with a post-last-minute deal to avoid the Fiscal Cliff that kicked negotiations over "sequestration"—$110 billion in across-the-board cuts to military and domestic spending—two months down the road, but raised income taxes (on the wealthiest Americans) for the first time in two decades.
Appeal Judges in the Court of Session yesterday issued a decision directing that the liquidators of Scottish Coal Company (SCC) cannot abandon sites or disclaim statutory licences imposing obligations on the company.
Commercial landlords hailed as a significant victory the enactment in 2005 of a 210-day “drop dead” period after which a lease of nonresidential real property with respect to which the debtor is the lessee is deemed rejected unless, prior to the expiration of the period, a chapter 11 debtor in possession (“DIP”) or bankruptcy trustee assumes or rejects the lease.
“Safe harbors” in the Bankruptcy Code designed to minimize “systemic risk”—disruption in the securities and commodities markets that could otherwise be caused by a counterparty’s bankruptcy filing—have been the focus of a considerable amount of judicial scrutiny in recent years. The latest contribution to this growing body of sometimes controversial jurisprudence was recently handed down by the U.S. Court of Appeals for the Second Circuit.
A recent overruling by the Supreme Court has revoked the priority status of pension schemes issued with a Financial Support Direction (FSD) or Contribution Notice (CN) by the Pensions Regulator, following an insolvency event. Whilst the decision largely affects companies operating within England and Wales, Scottish Courts are expected to be guided by the ruling.
The 2011 decision
One of the prerequisites to confirmation of a cramdown (nonconsensual) chapter 11 plan is that at least one “impaired” class of creditors must vote in favor of the plan. This requirement reflects the basic principle that a plan may not be imposed on a dissident body of stakeholders of which no class has given approval. However, it is sometimes an invitation to creative machinations designed to muster the requisite votes for confirmation of the plan.
December 2012 marked the fifth anniversary of the beginning of the Great Recession, which officially began in December 2007 and ended in June 2009 (at least in the U.S.). Five years down the road, the U.S. economy is undeniably on the road to recovery, with unemployment down to 7.8 percent from a high of 10.2 percent in October 2009, a significant drop in mortgage-foreclosure rates, and a housing market strengthened by the lowest mortgage rates in history. Even so, the recovery is shaky.
OSCR report issued following investigation of benefits to employee on wind-up