On January 14, 2020, the Supreme Court of the United States issued a decision resolving the question of whether a motion for relief from the automatic stay constitutes a discrete dispute within the bankruptcy that creates a basis for a final appealable ruling, or whether it simply is a controversy that is part of the broader Chapter 11 case, such that appeals would not need to be taken until the conclusion of the Chapter 11 case.
The oil and gas industry in the United States is highly dependent upon an intricate set of agreements that allow oil and gas to be gathered from privately owned land. Historically, the dedication language in oil and gas gathering agreements — through which the rights to the oil or gas in specified land are dedicated — was viewed as being a covenant that ran with the land. That view was put to the test during the wave of oil and gas exploration company bankruptcies that began in 2014.
The appeal decision of the Full Federal Court in AIG Australia Limited v Kaboko Mining Limited confirmed that an insolvency exclusion was not triggered where a cause of action by a company against its former directors did not contain allegations of insolvency, notwithstanding that the directors’ actions arguably led to the company’s insolvency.
Background
On February 25, 2019, the United States Court of Appeals for the Second Circuit issued a decision holding that a trustee is not barred by either the presumption against extraterritoriality or by international comity principles from recovering property from a foreign subsequent transferee that received the property from a foreign initial transferee.
On January 17, 2019, the United States Court of Appeals for the Fifth Circuit issued a decision holding that “impairment” under a plan of reorganization does not arise even if a creditor is paid less than it would be entitled to under its contract, so long as the reduced recovery is due to the plan’s incorporation of the Bankruptcy Code’s disallowance provisions.
Intercreditor agreements between secured creditors are intended to limit the potential for litigation and result in predictable commercial outcomes with respect to recoveries from collateral in enforcement actions and bankruptcies. Despite the extensive drafting efforts of sophisticated counsel to eliminate ambiguities in these agreements, the interpretation of intercreditor agreements has been the subject of substantial bankruptcy litigation.
In December 2018, NSW building certifier Watson Oldco entered into voluntary administration. The AFR reports that administrators have attributed the move largely to the result of uninsured exposure to potential claims arising from buildings with combustible cladding. Although there were no known claims against Watson Oldco, it was reported that there was uninsured exposure which led to the decision to place the company into voluntary administration.
The decision in Kaboko Mining Limited v Van Heerden (No 3)1 highlights the importance of considering carefully both the pleaded causes of action, as well as the underlying facts of a claim, to determine whether it ‘arises out of, is based upon or attributable to’ a particular event or circumstance that could trigger an exclusion.
Background
On November 8, 2018, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) issued a decision dismissing an involuntary chapter 11 case filed against Taberna Preferred Funding IV, Ltd. (“Taberna”), a CDO, by holders of non-recourse notes (the “Petitioning Creditors”).