We at the BCLP Global Insolvency and Restructuring Developments (the GRID) continue to watch and cover the growing jurisprudence of trustees seeking to recover pre-petition tuition payments made by a debtor parent to support his or her child’s college education.
Officers and directors work hard to shepherd their company through bankruptcy. But, even after all that hard work, creditors can still turn around and sue them individually for alleged acts prior to the bankruptcy. What kind of thanks is that? A debtor wishing to protect these hard-working officers and directors may seek to include a third party release in the plan.
Summary: Last year, a developer client raised concerns about the solvency of its main contractor, Carillion. With over 50% of the works still to be completed, the client wanted some advice as to how it could manage the risks (legally and practically) if the contractor did go “pop”. In January this year, the concerns became a reality. This blog addresses these key questions and what followed in the wake of Carillion’s demise.
Cease payment?
Editors’ Note: For those of you who like to get something you can use from blog posts, attached here is a Form PACA Nondischargeability Complaint for a PACA seller against a party that controlled a PACA buyer, where such controlling party later files for bankruptcy.
The U.S. Supreme Court recently scrutinized the proper application of the safe harbor found in Section 546(e) of the U.S. Bankruptcy Code1 in Merit Management Group, LP v. FTI Consulting Inc.2 While the Supreme Court's decision narrowed the reach of the safe harbor, it did little to change the landscape for the multi-billion dollar U.S. structured finance industry, including warehouse lending.
On February 27, 2018, the United States Supreme Court in a significant ruling held in Merit Management Group, LP v. FTI Consulting, Inc. that transfers of property of a debtor in which financial institutions are mere conduits or intermediaries may be avoidable. The Court ruled that the safe harbor provisions of section 546(e) of the Bankruptcy Code do not protect such transfers from avoidance.
The Bankruptcy Code prohibits a chapter 13 debtor from modifying a mortgage lien on the debtor's principal residence. Even in situations in which a secured creditor fails to file a proof of claim or otherwise participate in the bankruptcy proceeding, the Bankruptcy Code allows a secured creditor's lien on a primary residence to pass through the bankruptcy unaffected. However, a recent decision from a bankruptcy court in Texas illustrates the risks to secured creditors of blind reliance on these statutory protections.
In March of this year, consumer electronics and home appliance retailer Gregg Appliances, Inc., better known as H.H. Gregg, filed for Chapter 11 bankruptcy in Indianapolis, Indiana. H.H. Gregg, which took over many of the retail spaces previously occupied by Circuit City, is one of many big-box retailers that have sought Chapter 11 bankruptcy over the past several years. Like Circuit City, H.H. Gregg was unsuccessful in reorganizing in bankruptcy and is now seeking to recover payments made to vendors and other creditors within 90 days prior to the bankruptcy filing.
In MF Global Holdings Ltd. et al. v. Allied World Assurance Co. Ltd. et al., No. 1:16-ap-01251 (Bankr. S.D.N.Y. Aug. 24, 2017), the United States Bankruptcy Court for the Southern District of New York ordered MF Global Holdings Ltd. and Allied World Assurance Co. Ltd. to arbitrate their $15 million errors-and-omissions coverage dispute in Hamilton, Bermuda.
On July 19, 2017, the Third Circuit Court of Appeals issued an opinion in Arrow Oil & Gas, Inc., et al. v. J. Aron & Company, et al.(In re Semcrude, L.P., et al.), Case Nos. 15-3094, 15-3095, 15-3096 and 15-3097, affirming the Delaware bankruptcy court and district court, holding that upstream oil producers do not have an automatically perfected statutory security interest in oil sold even if Texas or Kansas law applied.