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Management Purchase of Assets out of Insolvency Processes: Directors Retain Duties to the Creditor Body to Act in their Best Interests

Systems Building Services Group Ltd, Re [2020] EWHC 54 (Ch)

Liquidation is not a panacea for the relevance and application of directors' duties. A practical example of which involves a director of a company in insolvency procuring and agreeing to an off-market sale of a property to himself by a rogue IP at a price which he knew to be a significant undervalue.

United Kingdom, Company & Commercial, Construction, Insolvency & Restructuring, Litigation, Real Estate, Addleshaw Goddard LLP
No, You’re a Customer: Recent Second Circuit Decision Circumscribes Merit and Preempts State Law Impairment of Safe Harbor Protections in the Wake of a Failed LBO

On December 19, 2019, the United States Court of Appeals for the Second Circuit (the “Second Circuit”) affirmed a ruling of the United States District Court for the Southern District of New York (the “District Court”) dismissing constructive fraudulent conveyance claims brought by representatives of certain unsecured creditors of Chapter 11 debtor Tribune Company (“Tribune”)

USA, Insolvency & Restructuring, Litigation, Cadwalader Wickersham & Taft LLP, Title 11 of the US Code
NERA Economic Consulting Analyzes Allegations of Manufactured Defaults

The National Economic Research Associates ("NERA"), an economic consulting firm, demonstrated in a recent article how economic analysis can be used to assess allegations related to credit default swaps ("CDS") and the creditworthiness of a company.

USA, Derivatives, Insolvency & Restructuring, Cadwalader Wickersham & Taft LLP, Credit default swap
The Pension Schemes Bill: What does it mean for you?

The recently published Pension Schemes Bill provides for major extensions of the Pensions Regulator's powers, including the creation of new criminal offences which are very broad in scope and could potentially catch a wide range of people. Whilst the Bill is not set to become law this side of the general election, it seems likely that a future government will seek to enact the measures contained in the Bill, many of which are likely to command cross-party support. 

United Kingdom, Employee Benefits & Pensions, Insolvency & Restructuring, Addleshaw Goddard LLP, Private equity
The Same, Only Better: Eighth Circuit Affirms Peabody Chapter 11 Plan Backstopped Rights Offering Despite Alleged Disparate Creditor Treatment Under Peabody Plan

On August 9, 2019, in a unanimous decision (written by a former bankruptcy judge), the Eighth Circuit Court of Appeals affirmed the confirmation of the Peabody Energy Chapter 11 plan (“Plan”)1 with a prominent backstopped rights offering component.

USA, Insolvency & Restructuring, Litigation, Cadwalader Wickersham & Taft LLP, Debtor, Title 11 of the US Code
Third Circuit Affirms Rulings That Distributions to TCEH First Lien Creditors Are Governed by the Bankruptcy Code Rather Than Intercreditor Agreement Waterfall Provision on Enforcement of Collateral Remedies

On June 19, 2019, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) affirmed a ruling of the United States District Court for the District of Delaware (the “District Court”) dismissing challenges by certain first lien creditors of Texas Competitive Electric Holdings LLC (“TCEH”) to the plan distributions and adequate protection payments made during TCEH’s bankruptcy case.

USA, Insolvency & Restructuring, Cadwalader Wickersham & Taft LLP, Title 11 of the US Code
Trademark Licensees’ Rights Survive Bankruptcy Rejection

In Mission Product Holdings, the Supreme Court Endorses “Rejection-as-Breach” Rule and Interprets Broadly the Contract Rights that Survive Rejection

USA, Insolvency & Restructuring, Litigation, Trademarks, Cadwalader Wickersham & Taft LLP, Bankruptcy, Fourth Circuit, Seventh Circuit, Circuit court
The District Court in Tribune Circumscribes Merit and Maintains Section 546(e) Safe Harbor Protection for Shareholders in the Wake of a Failed LBO

Last year, the Supreme Court issued its decision in Merit, unanimously ruling that a buyout transaction between private parties did not qualify for “safe harbor” protection under Bankruptcy Code section 546(e), on the basis that a “financial institution” acted as an intermediary in the overarching transaction.

USA, New York, Corporate Finance/M&A, Insolvency & Restructuring, Litigation, Cadwalader Wickersham & Taft LLP, Leveraged buyout
Filling an Enforcement “Make-Whole”: Bankruptcy Court Enforces Prepayment Premium Notwithstanding Prepetition Loan Acceleration

On March 18, 2019, Judge Stuart M. Bernstein of the United States Bankruptcy Court for the Southern District of New York issued a decision enforcing a mortgage lender’s claim for a prepayment premium (a/k/a make-whole or yield maintenance premium) notwithstanding the lender’s prepetition acceleration of the loan due to the debtor’s default.

USA, New York, Banking, Insolvency & Restructuring, Litigation, Cadwalader Wickersham & Taft LLP, Liquidated damages, Second Circuit, US District Court for the Southern District of New York
Adjudication and insolvency: are the two compatible?
  • The Court of Appeal has given guidance to insolvent companies about whether to commence an adjudication.
  • There is an important distinction to be drawn between a company in a CVA and one in liquidation.
  • Parties need to be careful when making general reservations to an adjudicator's jurisdiction.

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United Kingdom, Construction, Insolvency & Restructuring, Litigation, Addleshaw Goddard LLP