The case of Hunt (as Liquidator of System Building Services Group Ltd) v Michie & Ors [2020] EWHC 54 (Ch) examines whether directors’ duties continue after the company has become insolvent and confirms that they do, bringing welcome clarity to the point. As such, Insurers will need to review their policies to make clear if they wish to cover this risk.

When a debtor files for bankruptcy, the Bankruptcy Code provides for an automatic stay of almost all proceedings to recover property from the debtor. See 11 U.S.C. § 362(a). A party in interest can seek an order exempting it from the automatic stay for cause. 11 U.S.C. § 362(d). A creditor that fails to obtain relief from the stay is limited to the claim-adjudication process in bankruptcy court. What happens if the bankruptcy court rules against a creditor seeking relief from the automatic stay, and the creditor seeks to appeal?

Prelude

India and the United Arab Emirates (‘UAE’) have witnessed dynamic bilateral relations in the recent past. Leadership of both countries have endeavoured to bolster ties of the two economies which has aligned India to achieve its insatiable ambition of emerging as a USD 5 trillion economy.

Last month, New York enacted the Uniform Voidable Transactions Act (“UVTA”)[^1], which seeks to modernize the state’s fraudulent conveyance law.

Since its introduction by the Uniform Law Commission in 2014, the UVTA has now been adopted by 21 states.^[2] The UVTA was originally drafted by the Uniform Law Commission as an amendment to the 1984 Uniform Fraudulent Transfer Act (“UFTA”); New York was one of only seven states that did not adopt the original UFTA.^[3]

On December 19, the Court of Appeals for the Third Circuit became the first federal circuit court of appeals to hold that a bankruptcy court may confirm a plan containing nonconsensual third-party releases without exceeding the constitutional limits on its jurisdiction articulated in Stern vs.

The U.S. Bankruptcy Code allows debtors to stay in control of their businesses in chapter 11. But the Code also empowers bankruptcy judges to replace a debtor’s management in certain circumstances with an outside trustee. This will happen if either cause exists to expel management or appointing a trustee is in the best interests of creditors, any equity holders, and other interests of the estate. 11 U.S.C. § 1007. Judges don’t need to hold an evidentiary hearing to appoint a trustee, but the decision to do so must be based on clear and convincing evidence.

Section 303 of the Bankruptcy Code allows creditors to initiate an involuntary bankruptcy case against a debtor. The petition initiating the case must be filed by creditors holding claims aggregating to at least $10,000, and those claims must not be “contingent as to liability or the subject of a bona fide dispute as to liability or amount.” 11 U.S.C. § 303(b)(1). Courts have disagreed as to how this provision applies when a portion of a claim is undisputed.

Das Oberlandesgericht München hat in einem bisher unveröffentlichten Hinweisbeschluss^[1] die Rechtsauffassung des Oberlandesgerichts Celle^[2] und des Oberlandesgerichts Düsseldorfs^[3] bestätigt, dass für Ansprüche des Insolvenzverwalters gegen Geschäftsführer wegen Zahlungen trotz Insolvenzreife kein Versicherungsschutz unter einer D&O-Versicherung besteht. Daneben hat das Oberlandesgericht München auch zur Verteilung der Darlegungs- und Beweislast in Abtretungskonstellationen Stellung bezogen.

We recently reported on a decision of the United States Court of Appeals for the Third Circuit in favor of a creditor that seized a debtor’s property pre-petition.

Whether because of, or in spite of, the proliferating case law it is hard to say, but the issues in, underlying and surrounding third-party releases in Chapter 11 plans just continue to arise with incessant regularity, albeit without a marked increase in clarity. We have posted about those issues here six times in little more than two years,[1] and it is fair to assume that this post will not be the last.