There is longstanding controversy concerning the validity of release and exculpation provisions in non-asbestos trust chapter 11 plans that limit the potential exposure of various parties involved in the process of negotiating, implementing and funding the plan. The U.S. Bankruptcy Court for the Eastern District of Washington recently contributed to the extensive body of case law addressing these issues in In re Astria Health, 623 B.R. 793 (Bankr. E.D. Wash. 2021).
This article summarises the findings of the High Court in Re gategroup Guarantee Limited [2021] EWHC 304 (Ch) (Re gategroup Guarantee Limited) and provides a view of its effects on the cross-border application of the Restructuring Plan (defined below) and the use of co-obligor structures in restructurings.
The Restructuring Plan
Introduction
Business Bankruptcy Filings
Public Company Bankruptcies
Notable Bankruptcy Rulings
Legislative Developments
WHITE PAPER A Multifaceted Maze: The FCA’s Role and Powers in Distressed Situations The last five years have seen a substantial increase in the number and variety of regulated firms operating in the United Kingdom, with the development in particular of financial services provided by new technology firms, asset managers, challenger banks, payment providers and e-money issuers. At the same time, an increasing number of UK Financial Conduct Authority (“FCA”) regulated firms have entered into insolvency proceedings.
On 24 February 2021, the UK government laid The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 before Parliament.
These draft regulations introduce (among other items) new restrictions on “pre-pack” disposals to connected persons and are seemingly a policy response to growing criticism around the inequity of pre-pack sales.
On October 26, 2020, the U.S. Bankruptcy Court for the Southern District of Texas issued a long-awaited ruling on whether natural gas exploration and production company Ultra Petroleum Corp. ("UPC") must pay a make-whole premium to noteholders under its confirmed chapter 11 plan and whether the noteholders are entitled to postpetition interest on their claims pursuant to the "solvent-debtor exception." On remand from the U.S.
Introduction
Priority of Income Tax Claims
Affirmative Insurance
The Bankruptcy Court's Ruling
The District Court's Ruling
Outlook
In This Issue:
The Year in Bankruptcy: 2020
A brief chronicle of the year's notable developments in corporate bankruptcy and restructuring. [read more …]
Focus on Health Care Provider Bankruptcies
Pre-pack sales have long been criticized by certain stakeholders for allowing the phoenix to rise from the ashes having shed its liabilities. However, they remain a popular restructuring tool, and given the current economic climate, we are likely to see an increased number of pre-pack insolvency sales in the next few years. In brief, a pre-pack sale involves the marketing of a business prior to its insolvency and the sale of the business and assets of the company by an insolvency practitioner immediately following his or her appointment.
With effect from December 1, 2020, Her Majesty's Revenue and Customs ("HMRC") ranks ahead of floating charge holders and unsecured creditors with respect to recovering certain pre-insolvency taxes from an insolvent business ("Crown preference"). Directors can also now incur personal liability for the unpaid taxes of an insolvent company where they are involved in tax avoidance, evasion, or phoenixism.