The Board of Governors of the Federal Reserve System proposed a rule that would require US global systemically important banking institutions to amend their contracts for certain common financial transactions to preclude the immediate termination of such contracts if a firm enters bankruptcy or a resolution process. Relevant contracts – termed “qualified financial contracts” – that would have to be amended include those used for derivatives, securities lending and short time financing such as repurchase agreements.
Key points
- Principles applying to exercise of liquidators’ powers are the same as those prior to legislative changes
- Views of creditors influenced by personal considerations to be disregarded
- The overriding requirement is for liquidators to exercise their professional judgment in the best interests of creditors
The facts
Key Points
- Test for personal service of bankruptcy petition same as for claim forms
- Document to be handed to debtor or contents explained and left “with or near” debtor
- Rule 7.55 can be used to remedy any irregularity in service if necessary
The Facts
Key Points
- Court considers the impact of the Spanish Insolvency Act on guarantees governed by English law
- Court holds that the liability under the guarantee was not extinguished
The Facts
A federal appeals court in Illinois held that Bank of New York Mellon Corporation and Bank of New York (collectively, “BNYM”) were on “inquiry notice” that Sentinel Management Group, Inc. improperly used customer funds as collateral for a loan prior to the firm’s collapse in August 2007. (Sentinel was an investment management firm registered with the Commodity Futures Trading Commission as a futures commission merchant that claimed it specialized in short-term cash management for hedge funds, individuals, financial institutions and other FCMs.
Key Points
- An administrator may be able appeal an order restoring a company following dissolution
- The court has jurisdiction to backdate a winding up order made following restoration to the date of dissolution
- The court must exercise its discretion to do so with extreme caution
The Facts
Client Connection Limited (“Company”) was placed into administration and Ms Sharma (“A”) was appointed as administrator. Following a pre-pack sale of the business of the Company, A moved the Company to dissolution.
Twenty-one major global banks have already signed a relaunched stay protocol developed by the International Swap Dealers Association and other leading industry organizations in coordination with the Financial Stability Board. The purpose of the protocol is to help ensure the orderly resolution of a troubled bank by having firms voluntarily agree to abide by foreign resolution regimes in connection with cross-border transactions. A prior protocol was signed by 18 major banks in November 2014. The relaunched protocol increases the types of covered financial contracts.
Key Points
- Court considers the ownership of assets situated at premises owned by the bankrupt in the context of limited relevant evidence
- Court emphasises the importance of joining the correct parties to litigation
The Facts
A federal judge in New York – the Hon. Richard J. Sullivan – mostly granted JP Morgan Chase Bank’s motion to dismiss claims brought on behalf of unsecured creditors of Lehman Brothers Holdings Inc. related to JPM’s requirement that Lehman Brothers Inc., LBH’s broker-dealer subsidiary, pledge and post extra collateral in September 2008, shortly before LBI filed for bankruptcy protection on September 15, 2008.
Key points
- Section 236 (inquiry into company’s dealings) does not have extra-territorial effect
- Section 237(3) (examination) only has extra-territorial effect where appropriate machinery exists in the foreign jurisdiction
- Taking of Evidence Regulation not available where litigation not commenced or contemplated
The facts