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MtGox seeks protection under chapter 15 of the Bankruptcy Code

In late February 2014, MtGox Co., Ltd (“MtGox”), once the largest bitcoin exchange in the world, suspended all trading on its exchange after internal investigations revealed a loss of approximately 750,000 of its customers’ bitcoins worth nearly $473 million. That loss caused MtGox to become insolvent.

Japan, USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Title 11 of the US Code
Second Circuit interprets securities contract safe harbor broadly for second time in three years

CASE SNAPSHOT

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Security (finance), Safe harbor (law), Second Circuit
Fourth Circuit concludes that certain commissions and margin interest payments are protected from avoidance by "stockbroker defense"

CASE SNAPSHOT

In a case of first impression, the Fourth Circuit determined that broker commissions shown to be reasonable and customary parts of settling stock sales constitute "settlement payments" and that the payment of margin interest constitutes "margin payments" under section 546(e) of the Bankruptcy Code such that these types of payments are immune from avoidance and recovery by a bankruptcy trustee.

FACTUAL AND PROCEDURAL BACKGROUND

USA, Capital Markets, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Interest, Margin (finance), Commission (remuneration), Fourth Circuit
First major PPSA decision - perfection is key!

Dispute is one of priority, not ownership.

The first judgment regarding a major Personal Property Securities Act ("PPSA") priority dispute between a bank with a perfected "General Security Agreement" and an equipment owner with an unperfected "PPS Lease" has been handed down.

The decision in Richard Albarran and Blair Alexander Pleash as receivers and managers of Maiden Civil (P&E) Pty Ltd & Ors v Queensland Excavation Services Pty Ltd & Ors  highlights three key issues for the insolvency industry:

Australia, Banking, Insolvency & Restructuring, Litigation, Baker McKenzie
Bankruptcy Court concludes that renewable power purchase and sale agreement is a "forward contract" entitled to safe harbor protections

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USA, Insolvency & Restructuring, Reed Smith LLP, Bankruptcy, Debtor, Renewable energy, Title 11 of the US Code, United States bankruptcy court
Time extensions for voidable transaction proceedings, and the commissioner for taxation

The importance of notifications to potential defendants and directors of the insolvent company

The decision in Re Octaviar Administration Pty Ltd (in liq) [2013] NSWSC 786 highlights two key issues for insolvency practitioners:

Australia, New South Wales, Insolvency & Restructuring, Litigation, Baker McKenzie, Liquidation
Distributions from an investment advisor to its customers may not be protected transactions under Section 546(e) of the Bankruptcy Code

CASE SNAPSHOT

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Security (finance), Safe harbor (law), Commodity, Liquidation, Title 11 of the US Code, United States bankruptcy court
Mechanics for accelerating repo transactions due to an event of default under the GMRA

Under the 2000 version of the Global Master Repurchase Agreement (the "GMRA"), a standard form agreement produced by The Bond Market Association and the International Securities Market Association, an Event of Default occurs, and all outstanding transactions under the GMRA are accelerated immediately, upon:

Global, Insolvency & Restructuring, Reed Smith LLP, Security (finance), Liquidation, Liquidator (law)
Appointment of administrators under U.K.'s is not an event of default under Global Master Repurchase Agreement

Under the Global Master Repurchase Agreement (the "GMRA"), a standard form agreement produced by The Bond Market Association and the International Securities Market Association, all of the events of default (with one exception) require both (i) the occurrence of an event and (ii) service by the non-defaulting party of a default notice on the defaulting party.

United Kingdom, Insolvency & Restructuring, Litigation, Reed Smith LLP, Liquidation, Default (finance), Liquidator (law)
Successor liability – does it survive a Section 363(f) sale?

This article was first published in The Bankruptcy Strategist

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor