In January 2020 we reported that, after the reconsideration suggested by two Supreme Court justices and revisions to account for the Supreme Court’s Merit Management decision,[1] the Court of Appeals for the Second Circuit stood by its origina

Unlike the GFC, which was essentially a liquidity crisis, Australia is likely to face a gradual increase in business insolvencies, rather than the feared ‘insolvency cliff’, as the Federal Government’s COVID-19 stimulus measures are wound down at the end of March.

This week’s TGIF focuses on themes that are emerging as Australia moves to an economic recovery phase and sees the end of government intervention to prevent insolvencies.

Key takeaways

It’s rare for a debtor in bankruptcy to raise allegations of involuntary servitude and a violation of the Thirteenth Amendment. But one debtor did just that after a chapter 11 trustee was appointed to take over the debtor’s bankruptcy estate. The debtor alleged the constitutional violation on the ground that he would be involuntarily forced to work for his creditors.

This week’s TGIF considers the decision of the Supreme Court of New South Wales In the matter of Gearhouse BSI Pty Ltd [2021] NSWSC 98. In this case, one of the joint venture parties obtained an order to wind up the joint venture on the basis that the underlying purpose of the business had failed.

Key takeaways

It is well known in the restructuring world that a debtor in bankruptcy can’t get a PPP loan. But what if you’re a debtor and decide a PPP loan could save your business? Will a court dismiss the case so you can seek a loan?

This week’s TGIF considers an application to wind up a company on just and equitable grounds. The Court declined to make the order, finding the suggested deadlock had an air of artificiality and the application was infused with self-interest.

Key takeaways

On Wednesday, February 23, just after 5:00 p.m., Belk, Inc. – a North Carolina-based department store chain – and its affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code. Less than 24 hours later, Bankruptcy Judge Marvin Isgur of the United States Bankruptcy Court for the Southern District of Texas entered an order confirming Belk’s Chapter 11 plan.

Does a debtor’s pre-petition change of the beneficiary of a life insurance policy constitute a “transfer” of an interest of the debtor in property? Not according to the U.S. Bankruptcy Court for the Eastern District of North Carolina, which held earlier this week that such transfers do not “diminish” the estate.^[1]

This week’s TGIF considers the decision of the Supreme Court In the matter of IW4U Pty Limited (In Liquidation) [2021] NSWSC 40, where the liquidators failed to recover compensation despite establishing contraventions of directors’ duties following an apparent phoenix.

Key takeaways