I am pleased to share a great article on the recent reform of German insolvency law regarding avoiding pre-insolvency transactions by my good friend and colleague Annerose Tashiro, a leading cross-border insolvency specialist in Germany. This is important in the event a contract counter-party becomes insolvent in Germany. Also, German avoidance laws are likely applicable should an insolvent German company also file a Chapter 15 proceeding in the U.S.

William Fry understands that, on 30 January 2017, having regard for the recent implementation of the Solvency II regime, EIOPA's Board of Supervisors adopted a decision (the "Decision") which will replace EIOPA's General Protocol relating to the collaboration of the insurance supervisory authorities of the Member States of the European Union (March 2008 Edition).

We understand that the Decision with replace the General Protocol as of 1 May 2017 (and will be available on EIOPA's website shortly).

In the interim, the General Protocol (March 2008 Edition) continues to apply.

The Court of Appeal has overturned a High Court ruling from 2015 that a former director of a car dealership was personally liable to a customer who paid the company for three vehicles in the weeks prior to the company's liquidation where the cars were ultimately not delivered to the customer due to the company's liquidation.

Background

Under Section 521(a)(2)(A) of the federal bankruptcy code, a debtor in a chapter 7 bankruptcy must file a statement within 30 days of the bankruptcy filing notifying the court, creditors and the trustee whether the debtor intends to retain or surrender property encumbered by a mortgage.  In its October, 2016 decision in the case of In re Failla, the 11th Circuit Court of Appeals, in affirming rulings from the bankruptcy court and the federal district court, held that once a chapter 7 debtor elects to "surrender" mortgaged property, he is precluded from thereafter opposing

In Reichhold Holdings US, Inc., on August 24, 2016, the Delaware Bankruptcy Court ruled that a vendor's reclamation trumped a lender's lien on inventory, arising from a post-petition DIP loan (that was used to repay the prepetition loan).

Generally, reclamation claims are subject to existing liens on inventory. However, where a prior loan is paid, the underlying liens are extinguished, and the existing reclamation claim becomes the first "lien" on the inventory. Liens arising from a subsequent DIP loan are junior to the pre-existing reclamation claim.

Companies that sell goods or extend credit to customers expect to be paid. When customers become insolvent, or file for Chapter 11 protection, those expectations are no longer realistic. Yet, there are a number of "creditor remedies" that can be utilized to maximize recovery from the insolvent customer. This article addresses one such "remedy": a carve-out from the pre-petition secured lender.

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

Certain North American based affiliates of Essar Steel Ltd (Mumbai) have today filed Chapter 11 and Chapter 15 petitions in Delaware. ESML Holdings Inc. and Essar Steel Minnesota LLC have filed Chapter 11 proceedings in Delaware. The following entities filed Chapter 15 petitions in Delaware: Essar Steel Algoma Inc. USA, Essar Steel Algoma Inc., Cannelton Iron Ore Company, Essar Steel Algoma (Alberta) ULC, Essar Tech Algoma Inc.

In Bankruptcy Code Section 363 sales of assets, there are winners and losers. 

Chapter 11 is known as a forum for reorganizing or selling a financially distressed business. If a Chapter 11 reorganization is not possible, a sale of assets may create investment opportunities for strategic buyers, investment banks, and private equity to take advantage of the “distress” normally associated with Chapter 11 to acquire assets at a discount, exemplifying Warren Buffet’s “value” buying.

Picture the scene: You have just received word that your customer has filed Chapter 11. You had followed my ad-vice (see article Reducing a Customer’s Accounts Receiva-ble in the Zone of Insolvency), and put the customer on a cash-before-delivery basis and demanded assurances of performance. You were successful in reducing the ac-counts receivable owed, and avoiding preference liability in doing so.

The customer, now a Chapter 11 debtor, calls and de-mands that you continue to ship, and resume credit terms.