The Bankruptcy (Amendment) Bill 2015 has been passed without amendment and was signed by the President on Christmas Day 2015. The headline amendment in the Bill is the reduction of the term of Bankruptcy from 3 years to 1 year which mirrors the term of bankruptcy in the UK. In addition to certain procedural amendments, the key amendments are summarised as follows:

The High Court recently determined the extent to which a secured creditor must comply strictly with the formalities set out in a security instrument when executing a Deed of Appointment of a receiver. The Court ruled that strict compliance is required and that, in this case, this had not occurred.

Background

The June 2013 issue of Baseload included the article “A $400 Million Devil in the Details: The Cautionary Tale of the Chesapeake Par Call.” We published an update to that article in the January 2015 issue. On July 10, 2015, the District Court for the Southern District of New York held that Chesapeake is required to pay the noteholders the make-whole amount.

If repayment of debt is accelerated as a result of bankruptcy, are debtholders eligible to receive a make-whole premium? The answer from an increasing number of courts is, without specific language in the indenture, no. Indentures usually include specific language to protect investors by declaring that upon certain designated “bankruptcy events,” all outstanding securities issued under that indenture become immediately due and payable (without further action from the holders of the securities).

Historically, investment grade debt with a make-whole provision was fairly straightforward. At any time during the life of the instrument, the issuer had the right to redeem the debt. But the price to be paid included the discounted value of the remaining payments of principal and interest over the life of the debt. Because the cost of paying the “make-whole” is often significant, issuers seldom redeem bonds when they are required to pay the make-whole price.

In the Matter of J.D. Brian Limited (In Liquidation) t/a East Coast Print and Publicity, In the Matter of J.D. Brian Motors Limited (In Liquidation) t/a Belgard Motors, In the Matter of East Coast Car Parts Limited (In Liquidation) and in the Matter of the Companies Acts 1963 - 2009

The Supreme Court has recently confirmed that a debtor can be adjudicated a bankrupt in Ireland and be subject to the Irish bankruptcy regime notwithstanding that the debtor has already been adjudicated a bankrupt in another jurisdiction, in this case the US.

Background

On May 4, 2015, the Supreme Court of the United States issued an opinion regarding a Chapter 13 bankruptcy case from the United States Court of Appeals for the First Circuit (the “First Circuit”).1 The question on appeal was whether debtor Louis Bullard (“Bullard”) could immediately appeal the bankruptcy court’s order denying confirmation of his proposed Chapter 13 payment plan (the “Plan”).2 The Court held that denial of confirmation of a debtor’s plan is not a final, appealable order.3  

Case Background

On 20 May 2015 the European Parliament adopted a recast of the European Insolvency Regulation. The Recast Regulation is in line with the EU’s current political priorities of promoting economic recovery and boosting growth and employment. The key objectives of the Recast Regulation are to move away from the traditional liquidation approach towards more of a “second chance approach” for businesses and entrepreneurs in financial difficulties, and to enhance cooperation and coordination in cross-border insolvency proceedings. 

Scope

The High Court has found two former directors of a car dealership in Dublin, Appleyard Motors Limited (In Liquidation) (Appleyard), personally liable to a former customer who paid for but did not receive three vehicles in the weeks leading up to the company’s liquidation. This case is particularly noteworthy as it is only the second time a director has been held personally liable for a company’s debts for reckless trading.