Setting aside a transaction on the basis that it was an extortionate credit transaction under the Insolvency Act 1986 (IA 1986 or the “Act”) is difficult. A bargain may be hard or even unreasonable, but that does not make it extortionate. The most important term to any credit transaction is usually the interest rate and that is most likely to be subject to scrutiny when considering whether or not a credit transaction contained grossly exorbitant terms.

In bankruptcy as in federal jurisprudence generally, to characterize something with the near-epithet of “federal common law” virtually dooms it to rejection.

In January 2020 we reported that, after the reconsideration suggested by two Supreme Court justices and revisions to account for the Supreme Court’s Merit Management decision,[1] the Court of Appeals for the Second Circuit stood by its origina

A recent decision of the Court has confirmed that the recipient of funds from an individual who is subject to a bankruptcy petition can be construed as having provided value where that value is given to a third party (and not to the bankrupt personally).

Roger Elford and Jessica Williams in the Corporate Restructuring and Insolvency team at Charles Russell Speechlys LLP acted for a successful Respondent, Howard de Walden Estates Limited, in these proceedings.

The Background

It seems to be a common misunderstanding, even among lawyers who are not bankruptcy lawyers, that litigation in federal bankruptcy court consists largely or even exclusively of disputes about the avoidance of transactions as preferential or fraudulent, the allowance of claims and the confirmation of plans of reorganization. However, with a jurisdictional reach that encompasses “all civil proceedings . . .

I don’t know if Congress foresaw, when it enacted new Subchapter V of Chapter 11 of the Code[1] in the Small Business Reorganization Act of 2019 (“SBRA”), that debtors in pending cases would seek to convert or redesignate their cases as Subchapter V cases when SBRA became effective on February 19, 2020, but it was foreseeable.

Our February 26 post [1] reported on the first case dealing with the question whether a debtor in a pending Chapter 11 case may redesignate it as a case under Subchapter V, [2] the new subchapter of Chapter 11 adopted by the Small Business Reorganization Act of 2019 (“SBRA”), which became effective on February 19.

The Government has announced proposals for retrospective changes for the urgent reforms to UK insolvency law, designed to protect companies and their directors during the COVID-19 outbreak.

Wrongful trading

These changes will include a temporary suspension (to the end of June 2020) of section 214 Insolvency Act 1986 in relation to wrongful trading, subject to passage of the upcoming Corporate Insolvency & Governance Bill through Parliament in the coming weeks.

Our February 26 post entitled “SBRA Springs to Life”^[1] reported on the first case known to me that dealt with the issue whether a debtor in a pending Chapter 11 case should be permitted to amend its petition to designate it as a case under Subchapter V,^[2] the new subchapter of Chapter 11 adopted by

State governments can be creditors of individuals, businesses and institutions that are debtors in bankruptcy in a variety of ways, most notably as tax and fine collectors but also as lenders. They can also be debtors of debtors, in their role, for example, as the purchasers of vast quantities of goods and services on credit. And they can also be transferees of a debtor’s property in (at least) every role in which they can be creditors.