The High Court has allowed an application for an order to enable access to a bankrupt’s pension to satisfy debts arising from fraud. Prior to the bankruptcy, judgment was obtained against him for £3.2m plus costs.
The Consolidated Appropriations Act of 2021 (the CAA), which President Trump signed into law on December 27, 2020, amends several provisions of the Bankruptcy Code. While a number of the amendments are applicable only to small businesses (e.g., businesses eligible to file under the new small-business subchapter of the Bankruptcy Code and/or businesses eligible to receive PPP loans), several others have more general application, as discussed below.
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Amendments of More General Application
In the United States, in a typical plain vanilla lending arrangement, if a counterparty files for bankruptcy, an automatic stay of enforcement actions is imposed that would prevent a lender from (i) foreclosing on the property of the debtor, (ii) terminating contracts with the debtor, (iii) commencing or continuing certain enforcement actions against the debtor or its property and/or (iv) setting off amounts owed under such arrangements (in each case unless a motion is filed and granted in the related bankruptcy case).
Pension Protection Fund: valuation assumptions
The PPF has consulted on changing the assumptions used for section 143 valuations (used for schemes in assessment periods) and section 179 valuations (used when setting a scheme's risk-based levy). The PPF expects that the proposed changes would increase section 143 and section 179 liabilities by just under 4% and would potentially lead to a small increase in the number of schemes transferring to the PPF.
Pension Protection Fund: insolvency risk provider
In In re KB Toys Inc.,1 the US Court of Appeals for the Third Circuit affirmed the holdings of the lower courts that claims subject to disallowance under Section 502(d) of the Bankruptcy Code are “similarly disallowable in the hands of the subsequent transferee.” According to the Third Circuit, when a creditor owes property to the estate, until that property is returned to the estate, that creditor’s claim, regardless of who holds it, is impaired, and the subsequent sale of that c
HIGHLIGHTS
The credit crunch caused problems for businesses at the same time as the value of pension scheme assets plunged, adding ballooning defined benefit pension deficits to the woes of struggling companies.
Company insolvencies, and attempts at restructuring to avoid insolvencies, can have a significant impact on the pension schemes sponsored by those companies. The pensions issues can also act as a significant obstacle to restructuring.
On May 4, 2012, the Delaware bankruptcy court inIn re KB Toys, Inc., et al. (KB Toys), handed down a thoughtful decision addressing the issue of whether impairments attach to a claim or remain with its seller. The KB Toys court held that “a claim in the hands of a transferee has the same rights and disabilities as the claim had in the hands of the original claimant. Disabilities attach to and travel with the claim.”
Proposals issued October 2010
Confirmation given 31 January 2011
Policy statement issued May 2011
Draft guidance on the bespoke measurement of investment risk issued May 2011. Consultation ends on 24 June 2011
Consultation on the 2012/13 levy determination expected in autumn 2011
The PPF has confirmed its intention to implement a new levy framework from 2012/13. Key features of the framework confirmed in the policy statement include: