Reversing the lower courts, the Third Circuit Court of Appeals has today held that, under New York law (which governs 95% of all indentures), the early repayment of indenture notes in Chapter 11 is an optional redemption requiring the payment of make-whole notwithstanding the automatic acceleration of the notes due to the Chapter 11 filing. Delaware Trust Co. v. Energy Future Intermediate Holding Company LLC (In re Energy Future Holdings Corp.), Case No. 16-1251 (5th Cir. Nov. 17, 2016).

Key Points

Having launched the original version three years ago, we have refreshed our Safeguarding Your Business guide as an eBook. The guide assists clients in protecting themselves either proactively or reactively in respect of a counterparty’s insolvency with new sections on trusts and examples of how we have helped, using some of the principles raised.

Key Points

• Interpretation of EU case law on protection of pension payments on employer insolvency not “entirely free from doubt”

The Facts

The claimant (C) was a member of the T&N defined benefit pension scheme from 1971 to 1998. In 2006, the scheme entered a PPF assessment period and C calculated that his pension under the PPF would, as a result of caps and limitations on indexation, be roughly 67% less than what he had previously expected.

Key Points

• Trustees in bankruptcy entitled to more than return of shares wrongfully transferred by bankrupt
• Trustees also entitled to recover loss in the value of shares
• Appropriate basis of valuation was fair value (not market value)

The Facts

Key points

• Court does not have jurisdiction to direct detailed assessment of fees agreed by administrators on application of liquidator
• Administrators can agree solicitors’ fees for work carried out during the administration after they cease holding office
• The court has no inherent jurisdiction to direct a detailed assessment

The facts

Key Points

• Court held notice to scheme creditors (here two weeks) was not sufficient in light of complexity of scheme
• Court also highlighted deficiencies in supporting documentation

The Facts

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