Nearly three years after the High Court decision on the case of BNY Corporate Trustee Services Ltd v Eurosail UK 2007 – 3BL PLC and others was handed down, the case has run its course in the Supreme Court. The case, which considers the correct interpretation of the balance-sheet insolvency test in section 123(2) of the Insolvency Act 1986, is of importance to insolvency practitioners, financial institutions, legal advisers, company directors and companies.  

Court of Appeal decision  

In the much anticipated decision of Belmont Park Investments PTY Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc [2011] UKSC 38 the Supreme Court has unanimously dismissed the appeal of Lehman Brothers Special Financing Inc (“LBSF”) and in so doing provided clarification as to the scope and application of the anti-deprivation rule (the “Rule”).

BNY Corporate Trustee Services Limited v Eurosail-UK 2007-3BL Plc & others [2011] EWCA Civ 227

The Court of Appeal has allowed companies around the country to breathe a solvent sigh of relief, as it has held that the so-called “balance sheet” test of insolvency in s123(2) Insolvency Act 1996 is intended to apply where a company has reached a “point of no return” rather than being used as a “mechanistic, even artificial, reason for permitting a creditor to present a petition to wind up a company”.  

Yesterday, a federal judge preliminary approved a $125 million cash settlement for former shareholders of New Century Financial Corp. (“New Century”). New Century was the second largest subprime mortgage originator before it filed for bankruptcy in April 2007. In February 2008, Michael J.

Late last week, the Governing Committee of the Fund for Orderly Bank Restructuring (FROB) met to discuss the restructuring of Caja de Ahorros y Monte de Piedad de Cordoba (CajaSur).

On Friday, the Washington Department of Financial Institutions closed Washington First International Bank, headquartered in Seattle, Washington, and appointed the FDIC as receiver. As receiver, the FDIC entered into a purchase and assumption agreement with East West Bank, Pasadena, California, to assume all of the deposits of the failed bank.

Today, the Federal Deposit Insurance Corporation (FDIC) announced the close of a Rule 144A sale of $1.8 billion principal amount of notes backed by 103 non-agency residential mortgage backed securities (RMBS) from seven failed bank receiverships.

Yesterday afternoon, the House Judiciary Committee held Part II of its series of hearings entitled “Too Big to Fail – the Role for Bankruptcy and Antitrust Law in Financial Regulation Reform.” Yesterday’s hearing focused on proposed financia

Summary

The joint administrators of Lehman Brothers International (Europe) (“LBIE”) have released their second statutory six month progress report for the period 15 March 2008 to 14 September 2009 (the “Report”).

A full copy of the Report is attached, which includes detail about the positions realised and expenses to date. Key points of interest are as follows:

On Thursday, General Motors Corporation (GM) filed its Annual Report on Form 10-K with the Securities and Exchange Commission which notably included an opinion of its auditors on its financial statements in which the auditors stated that GM’s “recurring losses from operations, stockholders’ deficit, and inabili