In a recent judgment, the English Court of Appeal gives guidance on when a non-party costs order will be made against directors or shareholders of an insolvent company engaged in litigation. The judgment will be of interest to all involved in insolvency based litigation.
A snap shot of the courts’ jurisdiction to make costs orders against non-parties
The recent interim decision of the Federal of Australia in Michele Bottiglieri Armatore SPA, Michele Bottigliere Armatore S.P.A [2021] FCA 795 highlights the Australian courts' willingness to recognise cross-border insolvencies in the context of foreshadowed arrests of vessels entering Australian waters.
Bulletins
Welcome to the second edition of our relaunched Commodities bulletin.
It is a privilege to introduce the bulletin from Singapore, with memories of contributing to our previous Commodities bulletin as a junior lawyer in London. Our global team has grown a lot since then, most recently with the addition of Peter Zaman and Dan Perera in Singapore and Matthew Cox in London, two of whom have contributed articles this month.
An interview with Mark Byers, Partner and Head of Strategic Relationships, Grant Thornton
What insolvency trends were you seeing before the pandemic?
As the measures in the UK designed to protect businesses from insolvency draw to an end, what guidance can be taken from Australia where similar measures ended a few months ago?
"`Staggering' legal fees in Boy Scouts Bankruptcy Case." So read the title of an article in The New York Times on May 11, 2021. According to the reporter, a "lawyer negotiating a resolution to the multi-billion dollar bankruptcy filed by the Boy Scouts of America billed $267,435 in a single month. Another charged $1,725 for each hour of work. New lawyers fresh out of law school have been billing at an hourly rate of more than $600." The bankruptcy judge presiding over the case has called the fee totals "staggering," said the reporter.
Given the global pandemic, it's somewhat unsurprising that the UK's loss of access to the EU Regulation on Insolvency Proceedings (EUIR) has received relatively little press.
After all, what with the state support of furlough and loan schemes along with the temporary suspension of winding up petitions and wrongful trading rules, as well as the ban on landlords evicting commercial tenants formal insolvencies in the UK have "just dried up" says HFW fraud and insolvency co-head Rick Brown.
The Third Circuit recently held, in a case from the Energy Future Holdings bankruptcy, that a losing stalking horse bidder can provide sufficient value to the debtor’s estate to receive an administrative claim for a break-up fee and expenses. In re Energy Future Holdings Corp., 990 F.3d 728, 748 (3rd Cir. 2021). This represents an expansive view of potential administrative claims related to those costs, providing bidders significant potential protections for their bids.
“[B]ankruptcy inevitably creates harsh results for some players,” explained the U.S. Court of Appeals for the Third Circuit on May 21, 2021, when it denied a film producer’s claim for contractual cure payments. In re Weinstein Company Holdings, LLC, 2021 WL 2023058, *9 (3d Cir. May 21, 2021).
What were the main insolvency and restructuring trends you were seeing pre-pandemic?