The Bankruptcy Protector

The Bankruptcy Protector

Imagine this: you sell a product to a company on credit at 8% interest until you are paid, and the company files for bankruptcy before repayment. Or maybe you are a hard money lender that made an unsecured loan at 18% to a company to bridge through hard times, and the company files for bankruptcy. Or maybe you are a secured creditor with a 5% loan on real estate, and after the borrower files for bankruptcy, you discover there is a defect in your mortgage and your lien can be stripped.

A person in possession of a debtor’s property upon a bankruptcy filing now has more guidance from the Supreme Court as to the effect of the automatic stay. In City of Chicago, Illinois v. Fulton, 141 S. Ct. 585 (2021), handed down on January 14 of 2021, the Court was faced with the issue of whether the City of Chicago (the “City”) was liable for violation of the automatic stay for refusing to return vehicles it impounded pre-petition. Issuing a narrow decision under Section 362(a)(3) of the Bankruptcy Code, the Court held that it was not.

Payment Orders were originally introduced in the CPC as a fast track route for creditors holding a financial instrument, such as a letter of credit or cheque, to obtain judgment against their debtor for what is a simple and indisputable debt. Payment Orders were rarely issued by the onshore UAE courts. In 2018, Cabinet Resolution No 57 of 2018 (the “2018 Cabinet Resolution”) significantly expanded the scope of application of Payment Orders by extending them to all admitted debts rather than simply those arising out of financial instruments only.

Pacific Gas and Electric Company and PG&E Corporation (together “PG&E”) filed for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of California on January 29, 2019.