In a bid to assist struggling companies amid the uncertainty brought on by the pandemic, Hungary issued Government Decree No. 249/2020, which amends the Bankruptcy Code and gives companies breathing space while they explore options for rescue.

The changes created by the decree, which came into force on 29 May 2020, will be in effect only during the state of the emergency and include the following:

In In re Palladino, 942 F.3d 55 (1st Cir. 2019), the U.S. Court of Appeals for the First Circuit addressed whether a debtor receives “reasonably equivalent value” in exchange for paying his adult child’s college tuition. The Palladino court answered this question in the negative, thereby contributing to the growing circuit split regarding the avoidability of debtors’ college tuition payments for their adult children as constructively fraudulent transfers.

Background

In a matter of first impression, the U.S. Bankruptcy Court for the Northern District of New York recently analyzed whether a debtor may exempt from her bankruptcy estate a retirement account that was bequeathed to her upon the death of her parent. In In re Todd, 585 B.R. 297 (Bankr. N.D.N.Y 2018), the court addressed an objection to a debtor’s claim of exemption in an inherited retirement account, and held that the property was not exempt under New York and federal law.

In Kaye v. Blue Bell Creameries (In re BFW Liquidation), 899 F.3d 1178 (11th Cir. 2018), the U.S. Court of Appeals for the Eleventh Circuit found that a liability for an allegedly preferential transfer may be reduced by the amount of new value given, regardless of whether that new value has already been repaid by the debtor before its bankruptcy filing.

On June 4, 2018, the U.S. Supreme Court issued its opinion in Lamar Archer & Cofrin LLP v. Appling,[1] resolving a circuit split on the issue of whether a debtor’s statement about a single asset constitutes “a statement respecting the debtor’s financial condition” for the purposes of 11 U.S.C. § 523(a)(2).

Alerts and Updates

The Supreme Court’s opinion is significant because it will encourage creditors to rely on written, rather than oral, statements of debtors as to both their assets and overall financial status, which are better evidence in a nondischargeability case.

In a recent decision out of the U.S. Bankruptcy Court for the Western District of Virginia, a court analyzed the effect of a setoff effectuated between two governmental units in the 90 days prior to the filing of a husband and wife’s bankruptcy case. In Hurt v. U.S. Department of Housing and Urban Development (In re Hurt), 579 B.R. 765 (Bankr. W.D. Va. 2017), the court addressed competing motions for summary judgment filed by the debtors, on the one hand, and the U.S.

A draft bill on amendment to the Bankruptcy Code (Act XLIX of 1991 on bankruptcy proceedings and liquidation proceedings) was introduced into the Parliament on 12 April 2017 and is currently under review. If the draft bill was approved and published, the new rules would be applicable to the new liquidation proceedings and to new management liability related lawsuits. Lawmakers would grant a 2-month period to prepare for the changes.

Key areas for change are:

1. Fiduciary security interests would be elevated to the same level as pledge-type security

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.