COVID-19 is taking an alarming and unfortunate toll on our country’s population. Each day, we collectively face daunting health risks, and the economic cost to individuals and businesses alike has already been, and will continue to be, staggering. Accordingly, more than at any point in the past decade, both debtors and creditors should consider the potential benefits of the bankruptcy process. This post discusses four basic bankruptcy concepts that always merit consideration, especially in these trying times.
State governments can be creditors of individuals, businesses and institutions that are debtors in bankruptcy in a variety of ways, most notably as tax and fine collectors but also as lenders. They can also be debtors of debtors, in their role, for example, as the purchasers of vast quantities of goods and services on credit. And they can also be transferees of a debtor’s property in (at least) every role in which they can be creditors.
Further to our update to the existing insolvency laws, whilst it appears from the recent government announcement that UK wrongful trading provisions may be retrospectively relaxed from 1 March for a three month period, directors should continue to have regard to their individual conduct, particularly given the increase of claims funded by the growing litigation funding market.
The UK Government has announced changes to the existing UK insolvency laws in order to ease pressure on companies and give them breathing space to trade through the COVID-19 pandemic.
Debtors in chapter 11 cases are required to make quarterly payments to the United States Trustee’s Office. These fees support the UST Program that serves in all districts but those in two states.[i] Quarterly fees must be paid until cases are closed. And cases are closed when they are “fully administered,” a term that isn’t defined in the Bankruptcy Code or Rules.
The importance of clarity in drafting agreements can never be understated. And while there are strategies available to spouses of business owners to help protect a family in bankruptcy, it is imperative to properly plan and draft to receive such protection from the Courts. In re Somerset Regional Water Resources, LLC, _____________ F.3d ________________ (3rd Cir. 2020) (“Somerset”), recently decided by the Third Circuit Court of Appeals, offers a prime example of both cautionary concepts.
Hunt (as Liquidator of Systems Building Services Group Limited) v Michie and Others [2020] EWHC 54 (Ch)
On 21 January 2020 ICC Judge Barber handed down a decision which considered, in what is believed to be a first, the question of whether director’s duties survive the insolvency of a Company.
When there are large numbers of substantial individual tort claims against a debtor, potentially involving claimants unknowable to the debtor who themselves may not know they have a claim, the bankruptcy process faces special problems. One objective of bankruptcy is to afford final relief to the debtor from the debtor’s debts, but discharging the claims of those unknown claimants without notice and a hearing poses due process problems.
There has been considerable progress towards resolution in two of the largest bankruptcy cases pending in the United States: the Commonwealth of Puerto Rico and the California utility, Pacific Gas & Electric.[1]
An appeal from a bankruptcy court’s final judgment must be filed within 14 days of when an appealable order is entered on the docket. Parties should not delay past the 14 days even if, for instance, the bankruptcy court must still decide a related request for an award of attorneys’ fees. Otherwise, an appeal will be untimely under Federal Rule of Bankruptcy Procedure 8002(a)(1).