In several Commonwealth jurisdictions, the corporate legislation allows creditors to petition a court to order the winding up of a debtor in circumstances where that debtor is unable to pay its debts as they fall due. Such legislation generally presumes that the debtor is insolvent if it has failed to comply with a statutory notice requiring the debtor to pay a certain debt within a given period of time (a statutory demand).
The Australian Government has introduced new laws which are intended to avoid unnecessary corporate insolvencies in light of the challenges presented by the unfolding COVID-19 global pandemic. The new laws came into effect on 25 March 2020 and include:
Just in time for the Chinese New Year, a Hong Kong court has taken a major step forward in the developing law on cross-border insolvency by recognizing a mainland Chinese liquidation for the first time. In the Joint and Several Liquidators of CEFC Shanghai International Group Ltd [2020] HKCFI 167, Mr. Justice Harris granted recognition and assistance to mainland administrators in Hong Kong so they could perform their functions and protect assets held in Hong Kong from enforcement.
Just in time for Chinese New Year, a Hong Kong court has taken a major step forward in the developing law on cross-border insolvency by recognising a mainland Chinese liquidation for the first time. InJoint and Several Liquidators of CEFC Shanghai International Group Ltd [2020] HKCFI 167, Mr Justice Harris granted recognition and assistance to mainland administrators in Hong Kong so they could perform their functions and protect assets held in Hong Kong from enforcement.
The recent decision from the United States Supreme Court in Lamar, Archer & Cofrin, LLP v. Appling (“Lamar”), further restricts a creditor’s ability to pursue future recovery on its debt through a nondischargeability action in a debtor’s bankruptcy. On June 4, 2018, the Court ruled in Lamar that a debtor’s false statement about a single asset must be in writing before the creditor’s debt can be excepted as nondischargeable in bankruptcy.
In the typical day-to-day experience in bankruptcy proceedings, the debtor’s ability to assume or reject executory contracts and leases under Section 365 of the Bankruptcy Code is seen from the sometimes-unfortunate perspective of the creditor.
Two recent cases analyzed the misrepresentations of a debtor regarding a single asset and held a written misrepresented value of a single scheduled estate asset would result in nondischargeability under Section 727, and that a verbal misrepresentation of a pre-petition asset to a creditor did not result in an exception to discharge under Section 523.
Two recent Bankruptcy Court cases both remind and illustrate the power and risks presented by discovery of facts and documents under Bankruptcy Rule 2004, showing that it can compel third parties to provide information to support later litigation against them or cause them to lose their 5th Amendment right against self-incrimination.
While it has taken five years of committee and court efforts, the “Stern Amendments” to the Federal Rules of Bankruptcy Procedure will become effective December 1, 2016. These amendments will streamline litigant and court procedures in resolving subject matter jurisdiction matters as between district courts and bankruptcy courts.
Two recent cases serve as reminders the devil is truly in the details.