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
The liquidation of Thomas Cook Group last month – and the ensuing cancellation of all flights and repatriation of 140,000+ customers – has prompted fresh scrutiny of the UK’s approach to airline insolvency.
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).
Back in March, we highlighted the launch of a consultation following the UK government’s proposal to introduce a new “secondary preferential” status for HMRC. Further details of the proposal can be found here : HMRC launches consultation on new “secondary preferential” status.
An old friend
On 25 October 2017, the Accountant in Bankruptcy (AIB) published its insolvency statistics for the latest quarter, July to September 2017.
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