Manley Toys Limited once claimed to be the seventh largest toy company in the world. Due to ongoing litigation and declining sales, it entered into a voluntary liquidation in Hong Kong. On March 22, 2016, the debtor’s appointed liquidators and foreign representatives filed a motion for recognition under chapter 15 of the Bankruptcy Code. The motion was opposed by ASI Inc., f/k/a Aviva Sports, Inc. (“Aviva”) and Toys “R” Us, Inc. (“TRU”).
U.S. Bankruptcy Rule 9019 provides that on a motion brought by a trustee (and thus a chapter 11 debtor-in-possession as well) the court may approve a settlement. The prevailing view is that due to the court’s approval requirement, pre-court approval settlement agreements are enforceable by the debtor but not against the debtor. The District Court for the Eastern District of New York recently disagreed. It held that the statutory approval requirement is not an opportunity for the debtor to repudiate the settlement.
Background and Summary
The English scheme of arrangement (“Scheme”) has found particular utility throughout the European Union (the “EU”) and internationally as a restructuring tool for both foreign and UK companies alike. Providing creditors with access to a court sanctioned compromise procedure (which can be used prior to formal insolvency), the Scheme has combined flexibility with a high degree of commercial and procedural certainty for all involved, including creditors.
Directors and officers (D&Os) of troubled companies should be highly sensitive to D&O insurance policies with Prior Act Exclusion. While policies with such exclusion may be cheaper, a recent decision by the U.S. Court of Appeal for the Eleventh Circuit raises the spectre that a court may hold a loss to have more than a coincidental causal connection with the officer’s conduct pre-policy period and make the (cheaper) coverage worthless.
A U.S. House of Representatives Bill would amend the Bankruptcy Code to establish new provisions to address the special issues raised by troubled nonbank financial institutions.
Europe has been a hot bed of legislative reform in the R&I space since the GFC. This panel discussed where some of the key jurisdictions had ended up in this process, in some cases, making significant changes to allow greater flexibility of treatment and efficiencies of process. Led by Philip Hertz (Clifford Chance), Lucas Kortmann (RESOR), Angel Martin (KPMG) and Dr Leo Plank (Kirkland & Ellis) discussed processes available in the UK, the Netherlands, Spain and Germany and some impending changes.
The consideration of the issues relating to TOPOIL begins in one of the three breakout sessions. This one considers whether some sort of restructuring process is appropriate and if so which might be the top options and their relative merits.
In a 2-1 opinion, the Second Circuit overruled the district court in Marblegate Asset Management LLC v. Education Management Corp., finding no violation of the Trust Indenture Act (“TIA”) in connection with an out-of-court debt restructuring.
Background
Addressing a novel issue in In re: International Oil Trading Company, LLC, 548 B.R. 825 (Bankr. S.D. Fla. 2016), the United States Bankruptcy Court for the Southern District of Florida recently denied in part an involuntary debtor’s motion to compel production of communications between the judgment creditor who had filed the involuntary bankruptcy petition and the petitioner’s litigation funder. The Court found that the attorney-client privilege and work product protection were applicable to certain disclosures made to the litigation funder, a non-lawyer third-party.