In a move to increase confidence in the insolvency regime, the UK Government has proposed new measures to improve transparency in pre-packaged administration sales where there is a disposal in administration of all or a substantial part of the company’s assets and it is made to a connected party within the first eight weeks of the administration.

On 20 May 2020, the UK government announced the Corporate Insolvency and Governance Bill (the “Bill”), introducing a mixture of permanent and temporary measures, the latter being in response to the financial challenges companies are facing as a result of the Covid-19 pandemic and lockdown. In the absence of extensive consultation with insolvency practitioners and industry experts, it remains to be seen how effective the measures will be in practice.

In June 2011, the United States Supreme Court issued its opinion in the case known as Stern v. Marshall. The U.S. Supreme Court held that filing a proof of claim in a bankruptcy case does not constitute consent to the bankruptcy court’s jurisdiction over all counterclaims or actions that the bankruptcy estate may later bring against the creditor.

In fact, filing the proof of claim constitutes consent only to those claims or actions that either (1) stem from the bankruptcy case itself; or (2) are necessary to the resolution of the creditor’s proof of claim.  

When a traditional nonbanking company files a case under the Bankruptcy Code, a judge is appointed to be the neutral arbiter of disputes that arise between the debtor and its creditors.

Introduction