The Facts

In between the presentation of a winding up petition and making of a winding up order, a company entered into a settlement agreement with the Respondent, who founded the company and was previously a shareholder and director of the company.

The Decision

In Short

The Situation: In cross-border restructuring cases, court-approved insolvency protocols are applied to facilitate communication between U.S. and foreign courts and standardize certain common procedures. The protocols are sometimes adapted to address case-specific issues.

The Result: Case-specific provisions tend to address information-sharing guidelines, claims reconciliation, the management of assets, and dispute resolution.

The facts

A former bankrupt had purported claims against a firm of solicitors arising pre-bankruptcy, which vested in his subsequently appointed trustee in bankruptcy. The debtor wrote to both the Official Receiver (OR) and, post appointment, the trustee in bankruptcy, offering to buy the claims. The trustee subsequently disclaimed the claims. The debtor alleged that the claims had already re-vested in him following his notice to both the trustee and the OR.

In the March/April 2013 edition of the Business Restructuring Review, we reported on an opinion by the U.S. Bankruptcy Court for the Southern District of New York concluding that a chapter 15 debtor’s sale of claims against Bernard Madoff’s defunct brokerage company was not subject to review as an asset sale under section 363(b) of the Bankruptcy Code.

Summary

Liquidators of a company pursued proceedings against the former administrators/liquidators of the company (Messrs White and Wood) alleging negligent and deliberate/dishonest overcharging of fees.

The facts

In Short

The Situation: For cross-border insolvency matters, parties increasingly depend on court-approved protocols to assist in the management of complex insolvencies involving a debtor or debtors whose assets, liabilities, or operations span international borders.

The Action: Courts in Bermuda, the British Virgin Islands, Singapore, the United Kingdom, and some U.S. bankruptcy districts have implemented Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters.

The Facts

A former director of the Torex group of companies pursued proceedings against the group’s administrators, bankers and the purchaser claiming that the sale had been at an undervalue, that the bank and purchaser conspired by unlawful means in respect of the sale and that the administrators had been negligent in distributing the prescribed part. The administrators, bank and purchaser all applied to strike out the claims by way of summary judgment.

Claims Against Administrators

On April 5 and June 8, 2017, the U.S. House of Representatives passed bills (the Financial Institution Bankruptcy Act of 2017 ("FIBA") and the Financial CHOICE Act of 2017) that would allow financial institutions to seek protection under Chapter 11 of the Bankruptcy Code.

In bankruptcy cases under chapter 11, debtors sometimes opt for a "structured dismissal" when a consensual plan of reorganization or liquidation cannot be reached or conversion to chapter 7 would be too costly. In Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973, 2017 BL 89680 (U.S. Mar. 27, 2017), the U.S. Supreme Court held that the Bankruptcy Code does not allow bankruptcy courts to approve distributions in structured dismissals which violate the Bankruptcy Code's ordinary priority rules.

Background

The bankrupt and her husband, the appellant, were joint tenants of a business premises pursuant to an underlease. The trustee in bankruptcy disclaimed ‘all my/our interest in Leasehold property under the terms of the [underlease] in respect of [the property]’.

Appellant’s Case

The appellant contended that the disclaimer operated such as to prevent the landlords from claiming for rent in the bankruptcy estate post disclaimer.

Landlords’ Case