Introduction

On 20 May 2025, Mr Justice Marcus Smith handed down his eagerly-awaited judgment sanctioning the two inter-conditional restructuring plans (the Plans) proposed by members of the Petrofac Group. The judgment raises issues described as “going to the heart of the Part 26A regime” and is significant as the first case to consider the application of the Court of Appeal’s ruling in Thames Water.

The judgment addresses three particularly interesting points:

On 8 April 2025, Mr Justice Marcus Smith delivered judgment granting Petrofac Limited and Petrofac International (UAE) LLC (the Plan Companies) permission to convene creditor meetings in respect of two inter-conditional restructuring Plans (the Plans). The fulsome judgment, following hearings on 28 February and 20 March, contains a number of interesting points:

“[T]his Court finds that the exceptions to discharge under §523(a) only apply to individuals in Subchapter V.”

• Spring, et al. v. Davidson and Blok Industries, Inc. (In re Davidson; In re Blok Industries, Inc.; Jointly Administered), Adv. No. 23-3005, Doc. 87, at 15 (Bankr., N.D. Fla., decided February 14, 2025).

Facts

• “While the pre-petition Debtor may have consented to waiver of the automatic stay in favor of [secured creditor], . . . other creditors did not”; and
• “The automatic stay is designed to protect both debtors and creditors alike.”

In re DJK Enterprises, LLC, Case No. 24-60126, Doc. 196, at 13 (Bankr., S.D. Ill., February 13, 2025).

In re DJK Enterprises

“[T]he appellant would not have acquired priority over other creditors by the sheriff’s levy, for the obvious reason that the right of property in the goods seized under the execution had previously passed” to the assignee under Debtor’s ABC.

• Reed v McIntyre, 98 U.S. 507, 512 (1878).

Facts

The Debtor, in the U.S. Supreme Court’s Reed v. McIntyre opinion, is a merchant.

Before 1998, (i) all student loans from for-profit lenders were dischargeable in bankruptcy, but (ii) student loans backed by the federal government or from non-profits were dischargeable in only these circumstances:

The Sino-Ocean restructuring plan is the first to be sanctioned in 2025 – but it starts the year off with a very interesting bang. In a relatively short (and commendably clear) judgment, the Court addresses head on:

The common law of assignments for benefit of creditors (“ABCs”) has been around for a very long time as an out-of-court process under the law of trusts: debtor is trustor, assignee is trustee, and debtor’s creditors are beneficiaries.

And the common law of ABCs had already been well-established, when the U.S. Constitution was ratified.

New rules in the UK allow Companies House to share non-public information with insolvency officeholders and the Official Receiver.

While in many cases there may be limited non-public information available from Companies House that will be useful to insolvency officeholders, this is another tool available to deploy in appropriate cases. It is specifically envisaged to assist officeholders pursuing claims for fraudulent and wrongful trading, transactions at an undervalue and preferences.

The intersection of state escrow laws and federal bankruptcy laws can create confusion and surprise for contracting parties.

The Problem & Four Examples

The problem creating such confusion and surprise is this. State escrow laws:

• are, typically, defined by the common law;
• lack precise details; and
• are often applied in bankruptcy to the detriment of the party who believes a valid escrow exists.

Here are four examples of the escrow / bankruptcy problem.