One year ago, we wrote that, in early 2021, it was widely anticipated that the unprecedented pressure the COVID-19 pandemic brought to bear on the U.S. economy would lead to a boom in corporate bankruptcy filings. That boom never materialized. Instead, business bankruptcy filings in the U.S. plummeted in 2021. That trend continued until the last quarter of 2022.

The Bankruptcy Code confers "administrative expense" priority status on the claims of vendors for the value of goods that are shipped in the ordinary course of business and received by a debtor within 20 days of filing for bankruptcy. It also provides vendors and other creditors with various defenses to the avoidance of preferential payments received from the debtor during anywhere from 90 days to one year before filing for bankruptcy, depending upon whether the creditor is an "insider" of the debtor.

The ability of a bankruptcy trustee or chapter 11 debtor-in-possession ("DIP") to assume, assume and assign, or reject executory contracts and unexpired leases is an important tool designed to promote a "fresh start" for debtors and to maximize the value of the bankruptcy estate for the benefit of all stakeholders. Bankruptcy courts generally apply a deferential "business judgment" standard to the decision of a trustee or DIP to assume or reject an executory contract or an unexpired lease.

In a decision likely to have significant impact on certain types of bankruptcy filings going forward, this morning, the Third Circuit Court of Appeals ordered the dismissal of the Chapter 11 bankruptcy case filed by Johnson & Johnson affiliate LTL Management LLC.

This article first appeared in Accountancy Daily on 20 January 2023.

With supply chain problems, war in Europe and other issues leading to higher inflation and an increasingly uncertain economic outlook, this article explores the options available to companies experiencing financial distress.

Since the United Kingdom implemented the National Security and Investment Act in January 2022 ("NSI Regime"), there has been a significant increase in state intervention in, and review of, business transactions in the United Kingdom, including for international transactions involving targets with limited activities in the United Kingdom.

In East-West Logistics LLP v Melars Group Ltd [2022] EWCA Civ 1419 the Court of Appeal once again considered the test for establishing the location of a debtor's centre of main interests (COMI) for the purposes of the Recast Regulation on Insolvency Proceedings 2015/848. The case was a second appeal considering whether to uphold the dismissal of a winding up order on the grounds that the debtor's COMI was not in the United Kingdom.

In the context of rising energy and raw material prices, the German federal government has passed an Act regarding the Mitigation of Consequences of a Crisis under Restructuring and Insolvency Laws (Sanierungs- und insolvenzrechtliches Krisenfolgenabmilderungsgesetz – "SanInsKG").

Introduction

Perhaps given the relative rarity of solvent-debtor cases during the nearly 45 years since the Bankruptcy Code was enacted, a handful of recent high-profile court rulings have addressed whether a solvent chapter 11 debtor is obligated to pay postpetition, pre-effective date interest ("pendency interest") to unsecured creditors to render their claims "unimpaired" under a chapter 11 plan, and if so, at what rate. This question was recently addressed by two federal circuit courts of appeals. In In re PG&E Corp., 46 F.4th 1047 (9th Cir.