On May 21, 2015, the United States Court of Appeals for the Third Circuit affirmed a decision of the United States Bankruptcy Court for the District of Delaware, which had approved the structured dismissal of the Chapter 11 cases of Jevic Holding Corp., et al. The Court of Appeals first held that structured dismissals are not prohibited by the Bankruptcy Code, and then upheld the structured dismissal in the Jevic case, despite the fact that the settlement embodied in the structured dismissal order deviated from the Bankruptcy Code’s priority scheme.

In a memorandum decision dated May 4, 2015, Judge Vincent L. Briccetti of the United States District Court for the Southern District of New York affirmed the September 2014 decision of Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York, confirming the joint plans of reorganization (the “Plan”) in the Chapter 11 cases of MPM Silicones LLC and its affiliates (“Momentive”). Appeals were taken on three separate parts of Judge Drain’s confirmation decision, each of which ultimately was affirmed by the district court:

On 26 March 2015, the Deregulation Bill and the Small Business, Enterprise and Employment Bill received Royal Assent.  These Acts make a number of important changes to the law affecting directors, insolvency law and regulation. 

The changes affect (among other things) directors’ liabilities, the powers of administrators and the rights of creditors. While some changes are relevant to all those advising companies and directors, others are of interest principally to insolvency officeholders.

The Insolvency Service has issued a call for evidence inviting comments on the issues with, and improvements that could be made to, the collective redundancy consultation requirements for employers faced with insolvency. 

Dealing a major blow to the trustee’s efforts to recover fraudulent transfers on behalf of the bankruptcy estate of the company run by Bernard Madoff, Judge Jed S. Rakoff of the United States District Court for the Southern District of New York held in SIPC v. Bernard L. Madoff Investment Securities LLC¹ that the Bankruptcy Code cannot be used to recover fraudulent transfers of funds that occur entirely outside the United States.

The legal effect of “limited recourse” arrangements have been thrown into fresh doubt by a first instance decision of the respected Mr Justice David Richards in the case of Arm Asset Backed Securities S.A. [2013] EWHC 3351.

This decision is relevant to the following common financing arrangements.

The Supreme Court has handed down its highly anticipated judgment in the joint Nortel Networks/Lehman Brothers appeal.  The administrators of Nortel and Lehman Brothers entities had appealed against the Court of Appeal’s decision that Financial Support Directions (FSDs) issued by the Pensions Regulator (“the Regulator”) after the appointment of administrators attracted priority status as an administration expense.  Rejecting the decision of the lower courts, the Supreme Court ruled that an FSD issued during the course of an administration will rank as a provable debt rather than a

The uncertainty continues. Over the past few years, the published guidance from HMRC has given rise to doubts as to the tax treatment of debt-for-equity swaps. Whether the current legislation has supported HMRC’s position is debatable but it now appears that HMRC would like to have the legislation amended to more closely reflect its views.