In the Chapter 15 case of Three Arrows Capital, Ltd., the Bankruptcy Court for the Southern District of New York recently held that Rule 45 of the Federal Rule of Civil Procedure (“Rule 45”) authorizes service of subpoenas to U.S. nationals or residents who are in a foreign country through alternative means to personal service, including via email and Twitter.

Cryptocurrency is a hot topic in the legal industry and one with which the legal world is really just starting to grapple. This is ever more prevalent with a number of recent high-profile crypto insolvencies including Three Arrows Capital, Celsius Network and FTX.

Under Section 101(54) of the bankruptcy code, any means of disposing with an interest in property is considered a transfer, and therefore, under certain circumstances, may be avoided as a preference or fraudulent transfer. In a recent unpublished opinion, the Third Circuit addressed the scope of the provisions. The Third Circuit recently held that prepetition lease termination did not give rise to a transfer.

Background

As the chill of recession bites for homes and businesses alike, SMEs are faced with the daunting prospect of navigating their way through the bleak mid-winter. In October 2022, inflation reached 11.1% and company insolvencies were 38% higher than the same period last year. Creditors’ voluntary liquidations in the same period were 53% higher than in 2019 (i.e. pre-pandemic), continuing the theme of businesses being forced to consider this terminal insolvency process, as following the pandemic they have struggled to adapt to the challenging market conditions.

Section 303(i) of the Bankruptcy Code authorizes the court to award the debtor sanctions on account of an improper filing of an involuntary petition against it. But can a non-debtor third-party obtain such a relief? Yes, says the Bankruptcy Court In In re Vascular Access Centers, L.P., No. 19-17117 (AMC), 2022 WL 17366463 (Bankr. E.D. Pa. Dec. 1, 2022).

Background

The government’s monthly insolvency statistics for August 2022 present a concerning trend for companies hoping to weather the storm amid the current economic crisis. Largely driven by creditors’ voluntary liquidations, company insolvencies were 43% higher than the same period last year and 42% higher than in 2019 (pre-pandemic).

With administration figures creeping back up after falling to low levels during the pandemic, the number of pre-pack sales of businesses in administration also appears to be on the increase. In such transactions, a purchaser acquires all, or substantially all, of the business and assets of the insolvent company from the administrator, with the terms of the deal being agreed pre-appointment and completion usually taking place immediately after the administrator takes office.

Key Points

The U.S. Court of Appeals for the First Circuit recently ruled in the Puerto Rico bankruptcy case that Fifth Amendment takings claims cannot be discharged or impaired by a bankruptcy plan. As a matter of first impression in that circuit, the Court disagreed with the Ninth Circuit and held that former property owners affected by prepetition takings must be paid in full.

In re Fin. Oversight & Mgmt. Bd., 41 F.4th 29 (1st Cir. 2022)

In July, the Government published its report on The United Nations Commission on International Trade Law (UNCITRAL) introducing two new Model Laws with the aim of improving harmonisation of international trade and insolvency procedures: the Model Law on Enterprise Group Insolvency (MLEG) and the Model Law on Recognition and Enforcement of Insolvency-Related Judgments (MLIJ).The Insolvency Service is proposing to adopt the new measures contained in the MLEG and MLIJ as set out below.