Key Points

• Paragraph 13 of Schedule 4 to the Insolvency Act 1986 ("Paragraph 13") permits a liquidator to do all acts "necessary" for the winding up and distribution of property.
• The decision as to what action is "necessary" is one for the liquidators (albeit subject to sanction).
• Nothing in FSMA 2000 prevented the investors from assigning their claims against the former operators..

The facts

Key Point

Key Point

Neither failure to obtain debtor's consent to modifications to an IVA proposal, prior to the creditors' meeting; nor the unauthorised exercise of a proxy at a creditors' meeting render an approved IVA a nullity.

The facts

Key point

Only a current liquidator or a current creditor has standing in an English liquidation to pursue a claim under  section 212 of the Insolvency Act 1986 ("IA 86"). A former liquidator has no standing to apply to court to expunge a proof of debt (Insolvency Rule 4.85).

The facts

Key point

When assessing if a company is insolvent on the "cash-flow" basis, the Court will consider not only whether a company manages to meet its debts as they fall due but also how a company does so. A company meeting its debts simply by increasing longer-term debt, will likely be held to be insolvent.

The facts

Key point

A winding up petition founded on a tax assessment, which is the subject of an appeal to the Tax Tribunal, should be dismissed or stayed pending the appeal.

The facts

Key points

• Section 306 of the Insolvency Act 1986 (“1986 Act”) provides that a bankrupt’s estate shall vest immediately in the trustee in bankruptcy and no registration is required to effect that vesting;
• A bankrupt’s tenancy had vested in the trustee so that the bankrupt was no longer the qualifying tenant for the purposes of enfranchisement under the Leasehold Reform Act 1967 (“1967 Act”).

The facts

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”).

On Dec. 21, 2011, the U.S. Bankruptcy Court for the District of New Jersey approved a liquidation plan for collateralized-debt obligation issuer (“CDO”) Zais Investment Grade Limited VII (“ZING VII”). The plan incorporates a settlement between senior noteholders who had initiated the bankruptcy case by filing an involuntary petition against the CDO, and junior noteholders who were appealing the Bankruptcy Court’s April 26, 2011 order granting the involuntary petition.

The U.S. Bankruptcy Court for the District of New Jersey recently held that a Cayman Islands collateralized-debt obligation issuer (“CDO”) could be a debtor under Chapter 11 of the U.S. Bankruptcy Code (the “Bankruptcy Code”) and declined to dismiss an involuntary case commenced against the CDO by certain noteholders on the grounds that the notes held by such noteholders were “non-recourse” notes. Below is a discussion of the court’s decision and its potential implications. The decision is currently being appealed.