To encourage vendors and other creditors to continue doing business with financially distressed entities, the Bankruptcy Code includes various defenses to litigation brought by a bankruptcy trustee or chapter 11 debtor-in-possession ("DIP") seeking to avoid pre-bankruptcy payments to such entities. One of these defenses shields from avoidance transfers made to pay debts incurred in the ordinary course of business of the debtor and the transferee.

On January 23, 2024, the Court of Appeal in England and Wales (the "Appeal Court") upheld a challenge launched by dissenting creditors to overturn the UK Restructuring Plan (the "RP") of the Adler Group previously approved by the High Court under Part 26A of the Companies Act 2006 (Strategic Value Capital Solutions Master Fund LP and others v AGPS BondCo PLC [2024] EWCA Civ 24).

In Short

Federal appellate courts have traditionally applied a "person aggrieved" standard to determine whether a party has standing to appeal a bankruptcy court order or judgment. However, this standard, which requires a direct, adverse, and financial impact on a potential appellant, is derived from a precursor to the Bankruptcy Code and does not appear in the existing statute.

There is longstanding controversy concerning the validity of third-party release provisions in non-asbestos trust chapter 11 plans that limit the potential exposure of various non-debtor parties involved in the process of negotiating, implementing and funding a plan. In the latest chapter of this debate, the U.S. Court of Appeals for the Second Circuit handed down a long-awaited ruling regarding the validity of nonconsensual third-party releases in the chapter 11 plan of pharmaceutical company Purdue Pharma, Inc. and its affiliated debtors (collectively, "Purdue").

In Short

The Situation: Directors in England and Wales owe duties to the companies to which they are appointed (and may face personal liability for breaching such duties). Although the Companies Act 2006 obliges directors to maximise value for a company's shareholders, case law has suggested that directors should act in the interests of a company's creditors if a company becomes distressed.

Federal district courts, with the consent of the parties, are authorized by statute to refer "civil matter[s]" to magistrate judges for the purpose of conducting all proceedings and entering a judgment in the litigation. In the case of an appeal to a district court from a bankruptcy court, however, this statutory authority arguably conflicts with another statutory provision dictating that appeals from a bankruptcy court order or judgment be heard by a "district court" or a "bankruptcy appellate panel." This apparent conflict was recently addressed by the U.S.

In Short

The Situation: As businesses continue to grapple with realising the value of business and assets which are potentially impacted by sanctions related to Russia's war in Ukraine, an English company recently utilised an insolvency process to seek court approval for a proposed divestment.

Supreme Court to Resolve Circuit Split on Constitutionality of U.S. Trustee Fee Hike

A secured creditor's right to "credit bid" the amount of its allowed claim in a bankruptcy sale of its collateral is an important creditor protection codified in section 363(k) of the Bankruptcy Code. Even so, a ruling recently issued by the U.S.