In Czyzewski v. Jevic Holding, 580 U.S. __(2017), decided on March 22, the U.S. Supreme Court held that, without the consent of impaired creditors, a bankruptcy court cannot approve a "structured dismissal" that provides for distributions deviating from the ordinary priority scheme of the Bankruptcy Code. The ruling reverses the decisions of the U.S. Bankruptcy Court for the District of Delaware, the U.S. District Court for the District of Delaware, and the U.S.
The immediate effect of Jevic will be that practitioners may no longer structure dismissals in any manner that deviates from the priority scheme of the Bankruptcy Code without the consent of impaired creditors.
On 9 March 2017 the NSW Court of Appeal handed down its decision in Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liquidation) v Sakr [2017] NSWCA 38, unanimously allowing the liquidator’s appeal against a decision of Brereton J applying principles of proportionality and ad valorum to reduce the liquidator’s outstanding remuneration from the $63,000 claimed by the liquidator to $20,000.
In November 2016, the High Court of Australia heard a challenge brought by Clive Palmer in respect of the constitutional validity of the power of a liquidator to examine a former director of a company before the court. At the conclusion of that hearing, Kiefel J, as her Honour then was, stated that the Court was unanimously of the view that the challenge had failed and that reasons would be published later. Yesterday the High Court published those reasons.
The proceedings
Background
Insolvency Practitioners (IPs) commonly adopt time-based costing for the calculation of their remuneration, primarily on the basis that it ensures that the IP is only remunerated for the work actually undertaken and it ensures that remuneration reflects the simplicity or complexity of particular tasks. Three other ways in which remuneration are common calculated are ‘fixed fee’, ‘percentage’ (such as in respect of recoveries/realisations) and ‘contingency’ bases.
The bar for recovering assets that have been dubiously transferred out of an insolvent company may not be as high as one might think.
Background
On 14 June 2016, in its judgment delivered in Great Investments Ltd v Warner [2016] FCAFC 85, the Full Court of the Federal Court of Australia confirmed that a benefit transferred from a company without authority can only be retained by the recipient in very limited circumstances.
In today's low interest rate environment, the difference between a contractual interest rate and the federal judgment rate can be quite significant. It is not surprising, therefore, that this issue has become hotly litigated in cases involving solvent Chapter 11 debtors. Recently, the U.S. District Court for the Northern District of Illinois, in Colfin Bulls Funding A v. Paloian (In re Dvorkin Holdings), 547 B.R. 880 (N.D. Ill.
Puerto Rico is in the midst of a financial crisis. Over the past few years, its public debt skyrocketed while its government revenue sharply declined. In order to address its economic problems and to avoid mass public-worker layoffs and cuts in public services, the unincorporated U.S. territory issued billions of dollars in face value of municipal bonds. These bonds were readily saleable to investors in the United States due to their tax-exempt status and comparatively high yields.
On May 16, 2016, the Supreme Court of the United States handed down its opinion in Husky International Electronics, Inc. v. Ritz, Case No. 15-145.
Adding to the unsettled body of case law on the enforceability of prepetition waivers of the automatic stay, on April 27, 2016, the U.S.