In Harrington v. Purdue Pharma L.P., 144 S. Ct. 2071 (2024) (“Purdue”), the Supreme Court held that the Bankruptcy Code does not authorize nonconsensual releases of nondebtors as part of a chapter 11 plan. The Court narrowly read the Code’s language, providing that a plan may “include any other appropriate provision not inconsistent with the applicable provisions of this title,” 11 U.S.C.

Background

Crabb was the sole director of Courtside Recycling Ltd (Courtside). From 2014 to 2018, Crabb instructed Courtside's accountants to file VAT returns but only provided bank statements for one of the Company's three bank accounts. As a result, the VAT assessments significantly understated Courtside's true VAT liabilities for this period.

Following its own investigation and using transaction information gathered from Courtside's other bank accounts, HMRC issued amended VAT assessments. Courtside was unable to pay its VAT liabilities.

We have previouslyblogged about the section 546(e) defense to a trustee’s avoidance powers under the Bankruptcy Code. A trustee has broad powers to set aside certain transfers made by debtors before bankruptcy. See 11 U.S.C. §§ 544, 547, 548.

Background

This case involved a winding up petition presented against Bridger & Co Ltd (the Company) on 15 June 2023. The petition debt arises out of a funding agreement between the parties. The Company applied for an injunction to restrain the advertisement of the petition on various grounds. The court declined to make an injunction.

Decision

The judgment helpfully confirms the position on three issues in these types of proceedings:

We have previously blogged about the section 546(e) defense to a trustee’s avoidance powers under the Bankruptcy Code. A trustee has broad powers to set aside certain transfers made by debtors before bankruptcy. See 11 U.S.C. §§ 544, 547, 548. Section 546(e), however, bars avoiding certain transfers, including a “settlement payment . . . made by or to (or for the benefit of) . . . a financial institution [or] a transfer made by or to (or for the benefit of) a . . . financial institution . . . in connection with a securities contract.” 11 U.S.C. § 546(e).

Federal law assigns to U.S. district courts original jurisdiction over all cases under Title 11 (the Bankruptcy Code) and all civil proceedings arising under Title 11 or arising in or relating to Title 11. See 28 U.S.C. § 1334(a), (b). Federal law permits each U.S. district court to refer such cases and civil proceedings to bankruptcy courts, and district courts generally do so. But bankruptcy courts, unlike district courts, are not courts under Article III of the Constitution, and are therefore constrained in what powers they may constitutionally exercise.

This case concerned the immunity of receivers from claims, where the Court had approved the sale of assets over which they were appointed.

Background

Following a dispute between two shareholders of Blackpool Football Club Limited (BFCL), receivers were appointed by the court over certain assets related to Blackpool Football Club, including the shares held by the majority shareholder in BCFL, Denaxe Limited (Denaxe).

During the marketing process, the receivers concluded the best way forward was to sell the assets as one complete package.

Section 544(b)(1) of the Bankruptcy Code enables a trustee to step into the shoes of a creditor and avoid a transfer “of an interest of the debtor in property” that an unsecured creditor could avoid under applicable state law. See 11 U.S.C. § 544(b)(1). Thus, for example, if outside of bankruptcy a creditor could avoid a transaction entered by a debtor as a fraudulent transfer, in bankruptcy, the trustee acquires the power to avoid such a transaction.

We have blogged a fewtimes about the Supreme Court’s decision in Siegel v. Fitzgerald and its implications.

We have previously blogged about Bartenwerfer v. Buckley, No. 21-908, a Supreme Court case concerning the scope of the fraud exception to the dischargeability of debts in bankruptcy. Section 523 of the Bankruptcy Code exempts from discharge “any debt . . . for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by . . .