Fulltext Search
Fifth Circuit Rules on the "Solvent-Debtor Exception" and Make-Whole Premiums

On October 14, 2022, the U.S. Court of Appeals for the Fifth Circuit issued a long-awaited ruling on whether Ultra Petroleum Corp.

USA, Company & Commercial, Insolvency & Restructuring, Litigation, Jones Day, US Congress, United States bankruptcy court, Fifth Circuit, U.S. Court of Appeals
Fifth Circuit Rules on the "Solvent-Debtor Exception" and Make-Whole Premiums

In Short

The Situation: Courts have disagreed over whether a make-whole premium triggered by a borrower's bankruptcy filing must be disallowed as unmatured interest. They have also disputed whether the "solvent-debtor exception" requiring the payment of postpetition interest to unimpaired unsecured creditors of a solvent debtor survived the enactment of the Bankruptcy Code. Finally, courts have split on what rate of postpetition interest unimpaired unsecured creditors of a solvent debtor are entitled to receive.

USA, Insolvency & Restructuring, Litigation, Jones Day, US Congress, Fifth Circuit
Divided Ninth Circuit Rules That Unimpaired Unsecured Creditors of a Solvent Debtor May Be Entitled to Post-Petition Interest at Contract or State Default Rates

In Short

The Situation: Bankruptcy courts have split on what rate of post-petition interest unimpaired creditors of a solvent debtor are entitled to receive. Bankruptcy courts have variously ruled that such creditors were entitled to the contractual rate of interest, interest at the federal judgment rate (about the rate on a one-year Treasury bill) as of the bankruptcy petition date, or an equitable rate. Another possibility is that no interest is payable at all.

USA, Insolvency & Restructuring, Litigation, Jones Day, Supreme Court of the United States, Ninth Circuit
The Corporate Insolvency and Governance Act 2020

The Corporate Insolvency and Governance Act 2020 (the “Act”) came into force on 26 June 2020 and introduces both temporary provisions linked to the coronavirus pandemic and more permanent changes to the insolvency framework. The key measures can be summarised as below.

Temporary measures

Wrongful trading

Ireland, Insolvency & Restructuring, Arthur Cox LLP, Coronavirus
COVID-19 Practical Considerations: Company Directors and Insolvency Reforms (Northern Ireland)

Guidance for companies and company directors in Northern Ireland.

Overview

The adverse trading position caused by the COVID-19 situation is significantly impacting the majority of companies and is also bringing the duties of directors – particularly those relating to directors’ actions when a company is in difficulty or insolvent – into sharp relief.

Ireland, Company & Commercial, Insolvency & Restructuring, Arthur Cox LLP, Coronavirus
COVID-19: Practical Considerations: Managing Uncertainty (Northern Ireland)

With the measures in place to deal with the COVID-19 situation, volatility and disruption continue to affect Northern Ireland. As a leading full-service law firm, Arthur Cox is ideally placed to mobilise multi-disciplinary teams of lawyers to provide advice and support to organisations.

Ireland, Insolvency & Restructuring, Arthur Cox LLP, Coronavirus, HM Revenue and Customs (UK)