The case of Re Premier FX Limited (in Liquidation) highlights the potentially dire consequences for a creditor who does not file their proof of debt by a set deadline - and makes clear that mistakenly forgetting to do so is not a sufficient excuse.

Premier FX was in business as a foreign exchange dealer and money transfer agent. Financial advice was sought when it became clear to the (newly appointed) directors that the claims received from customers exceed the balance of the funds held by the company.

A pizza boss has been handed an eight-year director disqualification for failing to maintain adequate records to explain how a £50,000 bounceback loan was used.

The Bankruptcy Court for the District of New Jersey denied motions to dismiss the chapter 11 case of the newly created subsidiary of Johnson & Johnson, LTL Management LLC, and granted the debtor’s motion to stay prosecution of actions asserting talc related personal injuries against its J&J affiliates and the products distributors. This is the first opinion outside the North Carolina bankruptcy court approving the use of the so-called Texas Two Step as a bankruptcy execution strategy.

The Motions to Dismiss

R (on the application of Palmer) v Northern Derbyshire Magistrates’ Court [2021] EWHC 3013

The case of Palmer has confirmed that an insolvency practitioner in the role of an administrator can be prosecuted (and therefore personally liable) for a failure to follow correct redundancy procedures prescribed by s194 TULRCA.

Where an individual is found to have acted in breach of s194, they may be personally liable to an unlimited fine (or a fine of up to £5,000 if the offence is committed before 12 March 2015).

The facts

Despite calls upon the government to intervene and, later, attempts to sell the business, the South West construction firm Midas has collapsed into administration this week.

The collapse of the business has led to over 300 redundancies, though it is understood that a section of the business (Mi-Space) has been sold, saving over 50 jobs. Concerns have also been raised about the knock-on effort on sub-contractors and connected businesses, many of whom have been left out of pocket through unfulfilled contracts and unpaid invoices.

When the availability of bounceback loans was announced, it was heralded as the way for small businesses to quickly and easily access loans of between £2,000 and £50,000 during the COVID pandemic. Undoubtedly, it has helped a significant number of small businesses to weather the storm that COVID brought on many.

Key Takeaways

Highlights

Should a claim for appraisal rights brought by a former shareholder of a Chapter 11 debtor be subordinated under Section 510(b) of the Bankruptcy Code? According to the Bankruptcy Court for the District of Delaware, the answer is yes. See In re: RTI Holding Co., LLC, No. 20-12456, 2021 WL 3409802 (Bankr. D. Del. Aug. 4, 2021).

Background

Trillions of dollars of securities are issued on the strength of bankruptcy remoteness and special purpose entities (“SPVs”) intended to be bankruptcy remote. These transactions generally involve hundreds of millions of dollars and investors’ expectations that the SPVs will not be dragged into a potential bankruptcy filing of their non-SPV affiliates.