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.

Key points

• Automatic stays on proceedings are imposed by Article 20 of the UNCITRAL Model Law (and mirrored in s.130(2) IA 1986)
• The case reinforces the principle that automatic stays are designed to avoid the unnecessary expenditure of assets otherwise available for distribution amongst creditors

The facts

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.

The Facts

A owned two properties, one of which had been divided into two separately rateable properties for council tax purposes. R presented a bankruptcy petition against A based on a purported debt of £14,097.59 owed by A in respect of unpaid council tax for which it had obtained liability orders from the Magistrates Court.

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.

Key points

Rights under s23, s24 and s31 of the Matrimonial Causes Act 1973 (the “Act”) can only be pursued by the spouses themselves. Consequently, any ongoing action brought pursuant to those sections of the Act does not vest in the trustee in bankruptcy on appointment.

The facts

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.

In In re Zair, 2016 U.S. Dist. LEXIS 49032 (E.D.N.Y. Apr. 12, 2016), the U.S. District Court for the Eastern District of New York became the latest to take sides on the emerging issue of “forced vesting” through a chapter 13 plan. After analyzing Bankruptcy Code §§ 1322(b)(9) and 1325(a)(5), the court concluded that a chapter 13 debtor could not, through a chapter 13 plan, force a mortgagee to take title to the mortgage collateral.

Background

Key points

• Without notice applications for recognition orders carry the obligation of full and frank disclosure to the English court in relation to the effect such orders may have on third parties.
• Failure to provide full and frank disclosure may have cost consequences.

The facts

The failure of debtors to accurately list and value assets in their bankruptcy schedules is certainly not a new phenomenon. Recently, however, we are witnessing an increase in bankruptcy cases where debtors are using clever and deliberate means to omit assets or disguise the true value of their assets in an attempt to thwart recovery by creditors. While the U.S. trustee's or a creditor's remedy for such bad acts is to seek a denial of the debtor's discharge under 11 U.S.C.