City of Chester is the oldest city in Pennsylvania, incorporated as a borough in 1701 and as a city in 1866, and is located on the Delaware River between Philadelphia and Wilmington.
Unfortunately, the City is also in Chapter 9—having filed bankruptcy on November 10, 2022.
The City’s bankruptcy filing causes a ruckus because:
Corporate insolvency in BVI is governed by the Insolvency Act, 2003 (as amended) and the Insolvency Rules, 2005 (as amended). These laws are closely based on the English Insolvency Act 1986. There are a number of insolvency regimes available.
In Re Touradji Private Equity Master Fund Ltd, the Grand Court of the Cayman Islands made a supervision order in respect of three funds in voluntary liquidation, following applications by certain aggrieved investors and the joint voluntary liquidators, and over the objections of the investment manager.
Two broad themes are currently emerging in relation to European private equity real estate financing.
First, market commentary has noted that €150 billion of this finance is due to mature by 2025 – the "wall of credit".
The U.S. Supreme Court does not like bankruptcy benefits for individual debtors. It really doesn’t.
An example from a couple years ago is Fulton v. City of Chicago, where the U.S. Supreme Court finds a way to declare:
Can a corporate debtor be denied a Subchapter V discharge under § 523(a), despite this § 523(a) language (emphasis added):
- “A discharge under section . . . 1192 [Subchapter V] . . . does not discharge an individual debtor from . . . ”?
A recent Bankruptcy Court opinion (in Avion Funding) says, essentially, this: “No! You can’t paint over explicit statutory language.”[Fn. 1]
Such recent opinion:
In the recent Cayman Islands case of Re In the Matter of E-House (China) Enterprise Holdings Limited[1], dealing with creditors' schemes of arrangement, Justice Segal gave a helpful decision that provided judicial clarity on, among other matters, the potential impact of the recent sanctions regimes in the US, UK and Europe on the scheme, and the international effectiveness of the scheme.
In BVIHC(COM) 2022/0119, Russell Crumpler and Christopher Farmer as Joint Liquidators of Three Arrows Capital Ltd (in liquidation) -and- (1) Zhu Su (2) Kyle Davies
The BVI Court has endorsed what is believed to be its first extra-territorial order summoning directors of a BVI company (in liquidation) to appear for private examination by joint liquidators.
The U.S. Supreme Court issues its first-ever opinion—of any type—on August 3, 1791. [Fn. 1] But it does not address a bankruptcy question for quite some time thereafter. In fact, the first U.S. law on the subject of bankruptcy did not exist until the Bankruptcy Act of 1800.
First Bankruptcy Opinion
Here’s a hard-knocks rule:
- When you can’t or won’t explain the true reason for taking a position in negotiations or litigation, distrust and suspicion of the worst-possible motives will follow.
An Exhibit A for this rule is an opinion issued February 9, 2023, in In re Heaven’s Landing, LLC, Case No. 20-21350, Northern Georgia Bankruptcy Court (Doc. 145).
Here are illustrative statements from that opinion: