Madoff

The Government has issued a press release stating that it has approved the publication of an upcoming Bill providing the legislative basis for a new insolvency process: the Small Company Administrative Rescue Process (“SCARP”). The announcement follows the publication of the General Scheme of the Bill last month and its indications that it would be prioritising this legislation.

General Scheme Published.

The General Scheme of the Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021 was published this month. When enacted, this Bill will provide the legislative basis for a new corporate restructuring process that will be available to small companies: it is the Small Company Administrative Process (SCARP).

A General Scheme sets out the proposals for the text of a forthcoming Bill and the Government has granted approval for the priority drafting of this legislation (as discussed here).

Nordic Aviation DAC [2020] IEHC 445

In late 2020 the Commercial Division of the High Court approved a Scheme of Arrangement (Scheme) in respect an Irish-based aircraft leasing business Nordic Aviation Capital (NAC). The approved Scheme is of particular interest as it was recognised in the EU, UK and USA. NAC had secured and unsecured creditors in those jurisdictions on foot of loan or debenture instruments which were subject to New York, UK or German law.

It is generally recognized that a bankruptcy court has the power—either equitable or statutory—to recharacterize a purported debt as equity if the substance of the transaction belies the labels the parties have given it. A ruling handed down by the U.S. Bankruptcy Court for the Southern District of New York provides a textbook example of such a recharacterization. In In re Live Primary, LLC, 2021 WL 772248 (Bankr. S.D.N.Y. Mar.

In Stream TV Networks, Inc. v. SeeCubic, Inc., 2020 WL 7230419 (Del. Ch. Dec. 8, 2020), the Delaware Court of Chancery held that the assets of Stream TV Networks, Inc. ("Stream"), an insolvent Delaware-incorporated 3-D television technology company, could be transferred to an affiliate of two of Stream's secured creditors in lieu of foreclosure without seeking the approval of Stream's shareholders under section 271 of the General Corporation Law of Delaware ("DGCL") or Stream's certificate of incorporation.

On April 19, 2021, the U.S. Supreme Court declined to hear the appeal of a landmark 2019 decision issued by the U.S. Court of Appeals for the Second Circuit regarding the applicability of the Bankruptcy Code's safe harbor for certain securities, commodity, or forward contract payments to prevent the avoidance in bankruptcy of $8.3 billion in payments made to the shareholders of Tribune Co. as part of its 2007 leveraged buyout ("LBO").

BUSINESS RESTRUCTURING REVIEW VOL. 20 • NO. 3 MAY–JUNE 2021 IN THIS ISSUE 1 First Impressions: Third Circuit Scuttles Triangular Setoff in Bankruptcy 4 Should Equitable Mootness Bar Appeals Only of Chapter 11 Plan Confirmation Orders? 7 Debate Intensifies on Substantial Contribution Claims in Chapter 7 Cases 10 Bankruptcy Court Recharacterizes Purported Loan as Equity 14 In Brief: “Failing” Delaware Corporation Can Transfer Assets to Creditors in Lieu of Foreclosure Without Shareholder Consent 15 U.S.

The Minister of State for Trade Promotion, Digital and Company Regulation, Robert Troy TD, announced earlier this week the priority drafting of new legislation to introduce a new restructuring process. The Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021 will provide the statutory footing for what is now proposed to be termed the Small Company Administrative Rescue Process (“SCARP”).

On January 14, 2021, the U.S. Supreme Court held in City of Chicago v. Fulton, 592 U.S. __ (2021), that a creditor in possession of a debtor's property does not violate the automatic stay, specifically section 362(a)(3) of the Bankruptcy Code, by retaining the property after the filing of a bankruptcy petition. The Court's decision provides important guidance to bankruptcy courts, practitioners, and parties on the scope of the automatic stay's requirements.