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 (10th Cir. 2020), reh'g denied, No.
From 1 December 2020 new changes to the priority rules in insolvency will have a real impact on the recoveries achieved by secured creditors on the insolvency of a debtor. These new rules give HMRC priority above floating charge holders and ordinary unsecured creditors in relation to tax collected by an insolvent company from third parties, such as VAT, PAYE income tax and NICs.
Introduction
Derivative Standing
Dura Automotive
The Bankruptcy Court's Ruling
The McClatchy Company
Outlook
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.
On 25 June 2020, new legislation came into force in the UK which makes it much more difficult for suppliers to terminate contracts where the customer is subject to an insolvency procedure. In this briefing, we highlight the key issues that both suppliers and customers should be aware of and consider whether you should amend termination provisions in new contracts.
The first reading of the Corporate Insolvency and Governance Bill (the "Insolvency Bill") took place on 20 May 2020. The Insolvency Bill will be debated by the House of Commons on 3 June 2020 and is proposed to be introduced as fast-track legislation.
The Situation: In the past few weeks, due to the severe impact of the COVID-19 crisis on non-essential businesses forced to close and terminate employees after filing for chapter 11 protection, bankruptcy courts have been confronted with requests by debtors to temporarily suspend their bankruptcy cases using the courts' equitable powers and a seldom-used provision of the Bankruptcy Code: 11 U.S.C. § 305(a).
In This Issue:
U.S. Supreme Court: Creditors May Immediately Appeal Denials of Automatic-Stay Relief
In McKillen v. Wallace (In re Irish Bank Resolution Corp. Ltd.), 2019 WL 4740249 (D. Del. Sept. 27, 2019), the U.S. District Court for the District of Delaware had an opportunity to consider, as an apparent matter of first impression, whether the U.S. common law "Barton Doctrine" applies extraterritorially. One of the issues considered by the district court on appeal was whether parties attempting to sue a foreign representative in a chapter 15 case must first obtain permission to sue from the foreign court that appointed the foreign representative.