Following the Dec. 8 publication by the American Bankruptcy Institute (“ABI”) Commission to Study the Reform of Chapter 11 of a report (the “Report”) recommending changes to Chapter 11 of the Bankruptcy Code (“Code”),[1] we continue to analyze the proposals contained in the ABI’s 400-page Report. One proposal we wanted to immediately highlight would, if adopted, significantly increase the risk profile for secured lenders.
Generally with a winding-up petition, if the petitioner is successful in obtaining a winding-up order, the petitioner will have its costs of the proceedings. If, on the other hand, the petition is dismissed, then the petitioner has been unsuccessful and it should pay the costs of the proceedings. We explore the Companies Court’s treatment of costs in three recent decisions below.
From what Assets should a Petitioner have its Costs?
Under Hong Kong law, the courts’ jurisdiction is ordinarily territorial in nature. A plaintiff or applicant has to obtain permission (“leave”) of the court before it can validly serve a writ or other document initiating a legal action on a defendant or respondent located outside Hong Kong. For actions begun by writ, the procedures and criteria for applications for leave in this respect are set out under Order 11 of the Rules of the High Court (“RHC”).
Did you know that a liquidator of a foreign company may seek the assistance of the Hong Kong Court to obtain orders for the production of information which orders are, in substance, of the type made in Hong Kong windings-up under section 221(3) of the Companies (Winding-up and Miscellaneous Provisions) Ordinance?
Did you know that dispositions of property of a solvent company made after the commencement of a winding-up will unlikely be disturbed unless it can be demonstrated that the disposition is not in the interests of the company?
Setoff provisions are commonly found in a variety of trading related agreements between hedge funds and their dealer counterparties. Last November, Judge Christopher Sontchi of the United States Bankruptcy Court for the District of Delaware held that “triangular setoff” is not enforceable in the context of a bankruptcy case.[1] “Triangular setoff” is a contractual right of setoff that permits one party (“Party One”) to net and set off contractual claims of Party One and its affiliated entities against another party (“Party Two”).
Did you know that in the recent matter of Chan Kam Cheung v. Sun Light Elastic Ltd & Another1 the petitioner's alternative remedy for winding-up was struck out by the court?
The U.S. Court of Appeals for the Third Circuit held on July 30, 2013, that a reorganized Chapter 11 debtor could reopen its closed case, enabling the debtor assignee to enforce a purchase option in a real property lease despite the lease’s “anti-assignment provisions.” In re Lazy Days’ RV Center Inc., 2013 WL 3886735, *5 (3d Cir. July 30, 2013).
Cramdown Plan Stays Suits Against Corporate Parent
The U.S. Court of Appeals for the Fifth Circuit held on March 1, 2013, that a bankruptcy court had not erred in applying a prime plus 1.75 percent interest rate to a secured lender’s $39 million claim under a "cramdown" plan of reorganization. Wells Fargo Bank N.A v. Texas Grand Prairie Hotel Realty, LLC (In the Matter of Texas Grand Prairie Hotel Realty, LLC), __ F.3d __, 2013 WL 776317 (5th Cir. Mar. 1, 2013).