The Third Circuit recently affirmed the bankruptcy court's approved retention of the debtor's counsel ("S") when that "law firm dropped an existing client to avoid conflicts that would prevent it from taking on a more lucrative client [i.e., the debtor]." In re Boy Scouts of America, 2022 WL 1634643, *7 (3d Cir. May 24, 2022) (BSA). According to the court, there were "not enough facts to put [the so-called "hot potato" doctrine] into play" and disqualify S under the Rules of Professional Conduct. Id.

On 24 June 2022, the Honourable Mr Justice Harris (of the High Court of Hong Kong Special Administrative Region) granted assistance to Cayman Islands appointed Joint Provisional Liquidators (the “JPLs”) of Seahawk China Dynamic Fund, a solvent company incorporated in the Cayman Islands (the “Company”). Harris J ruled that the JPLs have the power to act as agents of the Company in Hong Kong. Reasons were delivered on 4 July 2022.

In the recent judgment In the Matter of GTI Holdings Limited delivered on 15 March 20221 , the Cayman Islands Grand Court reiterated the importance of principles of comity in cross-border insolvency matters and the central function of the place of incorporation.

A copy of the full judgment is available here. 

Background

Conyers were instructed by Silver Base Group Holdings Limited (“Silver Base”) in relation to a successful application for the appointment of “light-touch” provisional liquidators for restructuring purposes before the Grand Court of the Cayman Islands.

In the recent decision of Evergreen International Holdings Limited, delivered on 11 January 2022, the Grand Court of the Cayman Islands made an order for the immediate winding up of a company notwithstanding the company’s cross-applications for an adjournment of the winding up petition and the appointment of “light-touch” provisional liquidators for restructuring purposes. The Court dismissed the company’s cross-applications on the basis that there was no credible evidence which supported the company’s assertion that a viable restructuring was imminent. 

A bankruptcy court gave "unnecessary and likely incorrect" reasoning to support its "excessively broad proposition that sales free and clear under [Bankruptcy Code ("Code")] Section 363 override, and essentially render nugatory, the critical lessee protections against a debtor-lessor under [Code] 365(h)," said the U.S. Court of Appeals for the Fifth Circuit on Feb. 16, 2022. In re Royal Bistro, LLC, 2022 WL 499938, *1-*2 (5th Cir. Feb. 16, 2022).

“Good-faith purchasers enjoy strong protection under [Bankruptcy Code (“Code”)] § 363(m),” but the silent asset buyer (“B”) with “actual and constructive knowledge of a competing interest” lacks “good faith,” held the U.S. Court of Appeals for the Seventh Circuit on April 4, 2022. Archer-Daniels-Midland Co. (“ADM”) v. Country Visions Cooperative, 2022 WL 998984 (7th Cir. Apr. 4, 2022).

A bankruptcy court gave “unnecessary and unlikely incorrect” reasoning to support its “excessively broad proposition that sales free and clear under [Bankruptcy Code (“Code”)] Section 363 override, and essentially render nugatory, the critical lessee protections against a debtor-lessor under [Code] 365(h),” said the U.S. Court of Appeals for the Fifth Circuit on Feb. 16, 2022. In re Royal Bistro, LLC, 2022 WL 499938, *1-*2 (5th Cir. Feb. 16, 2022).

Appeals from bankruptcy court orders continue to play a key role in bankruptcy practice. The relevant sections of the Judicial Code and the Federal Bankruptcy Rules arguably cover all the relevant issues in a straightforward manner. Recent cases, however, show that neither Congress nor the Rules Committees could ever address the myriad issues raised by imaginative lawyers. The appellate courts continue to wrestle with standing, jurisdiction, mootness, excusable neglect, and finality, among other things.

A “federal [fraudulent transfer claim under Bankruptcy Code § 548] is independent of [a] state-court [foreclosure] judgment,” held the U.S. Court of Appeals for the Sixth Circuit on Dec. 27, 2021. In reLowry, 2021 WL 6112972, *1 (6th Cir. Dec. 27, 2021). Reversing the lower courts’ approval of a Michigan tax foreclosure sale, the Sixth Circuit reasoned that “the amount paid on foreclosure bore no relation at all to the value of the property, thus precluding the … argument that the sale was for ‘a reasonably equivalent value’ under the rule of BFP v.