On January 14, 2021, the U.S. Supreme Court held in City of Chicago v. Fulton, 592 U.S. __ (2021), that a creditor in possession of a debtor's property does not violate the automatic stay, specifically section 362(a)(3) of the Bankruptcy Code, by retaining the property after the filing of a bankruptcy petition. The Court's decision provides important guidance to bankruptcy courts, practitioners, and parties on the scope of the automatic stay's requirements.

The UK’s new “restructuring plan” was enacted in June 2020.¹ This highly-anticipated regime introduced (for the first time into English law) a tongue twisting “cross-class cram down” (CCCD) mechanism by which a restructuring plan can (at the court’s discretion) be imposed on an entire class of dissenting creditors or members.

Until recently, only two companies had successfully used the restructuring plan regime.² In both instances, CCCD was not considered as the required voting thresholds (i.e. 75%) were met.

In the latest chapter of more than a decade of litigation involving efforts to recover fictitious profits paid to certain customers of Bernard Madoff's defunct brokerage firm as part of the largest Ponzi scheme in history, the U.S. Court of Appeals for the Second Circuit held in In re Bernard L. Madoff Investment Securities LLC, 976 F.3d 184 (2d Cir.

In Short

The Situation: Circuit courts were split on whether mere retention by a creditor of estate property violates the Bankruptcy Code's automatic stay, under 11 U.S.C. § 362(a)(3). The U.S. Supreme Court considered the question inCity of Chicago v. Fulton, in which the City of Chicago had refused to return debtors' vehicles after they filed Chapter 13 bankruptcy petitions.

The ability of a bankruptcy trustee to avoid certain transfers of a debtor's property and to recover the property or its value from the transferees is an essential tool in maximizing the value of a bankruptcy estate for the benefit of all stakeholders. However, a ruling recently handed down by the U.S. Court of Appeals for the Tenth Circuit could, if followed by other courts, curtail a trustee's avoidance and recovery powers. In Rajala v. Spencer Fane LLP (In re Generation Resources Holding Co.), 964 F.3d 958 (10^th Cir. 2020), reh'g denied, No.

Introduction
Derivative Standing
Dura Automotive
The Bankruptcy Court's Ruling
The McClatchy Company
Outlook

Introduction

The practice of conferring "derivative standing" on official creditors' committees to assert claims on behalf of a bankruptcy estate in cases where the debtor or a bankruptcy trustee is unwilling or unable to do so is a well-established means of generating value for the estate from litigation recoveries. However, in a series of recent decisions, the Delaware bankruptcy courts have limited the practice in cases where applicable non-bankruptcy state law provides that creditors do not have standing to bring claims on behalf of certain entities.

The highly anticipated Insolvency and Corporate Governance Bill (the "Bill") was finally published on 20 May 2020. Following its second and third readings in the House of Commons yesterday (3 June 2020), the Bill will now be considered by the House of Lords in the coming days.

As reported last month, as part of its response to the Covid-19 pandemic, the UK Government has brought forward reforms to the corporate insolvency regime. The Corporate Insolvency and Governance Bill (the "Bill") has now been introduced to Parliament.

In the midst of the COVID-19 pandemic and the far reaching and drastic measures implemented in numerous countries around the world, we are receiving an increasing number of insolvency and restructuring enquiries from our clients.