A declaration sought by the Liquidator of an insolvent company that certain payments made to a director constituted fraudulent preference has been refused by the High Court in FF Couriers Limited & Companies Acts: Keane -v- Day & ors [2016] IEHC

On March 8, 2016, a bankruptcy court in the Southern District of New York issued a much-anticipated decision, In re Sabine Oil & Gas Corporation,¹ that will undoubtedly influence the reorganization strategies of certain exploration and production (E&P) companies and have a significant impact on midstream companies.

A recent decision of the Court of Appeal has seemingly halted a trend towards leniency in the High Court in applications for the restriction and disqualification of directors of insolvent companies, particularly where the company has been struck off the register of companies for failing to file annual returns.

Precipitous commodity price declines that began in mid-2014 continued to disrupt the oil and gas industry in 2015, outlasting the expectations of many analysts. By the end of 2015, prices for both Brent and WTI crude were fluctuating in the mid to upper $30s per barrel, down from highs of over $100 a barrel in mid-2014.

On November 18, 2015, the U.S. Bankruptcy Court for the Southern District of New York dismissed intentional fraudulent transfer claims asserted by a bankruptcy litigation trustee against former shareholders of Lyondell Chemical Company in Weisfelner v. Fund 1 (In re Lyondell Chemical Co.) (Lyondell II). By adopting a strict view of what constitutes intent, the opinion tightens pleading standards applicable to these cases. It bears watching whether other courts will apply Lyondell II's more demanding pleading standards.

A recent decision in the U.S. Bankruptcy Court for the Southern District of New York clarifies that restructuring options under Chapter 11 or Chapter 15 are available to foreign issuers of U.S. debt, even if those issuers have no operations in the United States (In re Berau Capital Resources PTE Ltd.). The decision could have widespread implications for cross-border restructuring transactions involving U.S.-issued debt, since the ability to utilize Chapter 11 or Chapter 15 offers many advantages for foreign issuers.

Background

Under long-established common law, loans must be paid only upon maturity, not before. This "perfect tender in time" rule is the default rule in a number of jurisdictions. Many indentures and credit agreements therefore either bar prepayments altogether with "no call" provisions or permit prepayments with "make whole" provisions that require the payment of a specified premium to make up for the loss of future income.

The Irish High Court recently, for the first time, recognised and gave effect to a Swiss law insolvency and restructuring process that had been commenced in Switzerland in respect of a Swiss company.

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