In In re Palladino, 942 F.3d 55 (1st Cir. 2019), the U.S. Court of Appeals for the First Circuit addressed whether a debtor receives “reasonably equivalent value” in exchange for paying his adult child’s college tuition. The Palladino court answered this question in the negative, thereby contributing to the growing circuit split regarding the avoidability of debtors’ college tuition payments for their adult children as constructively fraudulent transfers.
Background
Wrongful Trading
On 14 May 2020, the UK Government extended the temporary suspension of wrongful trading liability until 30 June 2020.
Further relief for Myanmar hotels - exemption on licence fees and deferment of land lease payments
The hotel and tourism sector in Myanmar and across the globe has been severely affected by the COVID-19 pandemic. Since 19 March 2020, Myanmar has closed all land borders with its neighbouring countries and from 31 March 2020 to 15 May 2020, all international commercial passenger flights are banned from landing in Myanmar. As a result, the occupancy in many hotels is currently running low (some in single digits) and certain hotels have temporarily ceased operations.
From 6 April 2020, all non-UK resident corporate landlords (NRLs) are within the charge to UK corporation tax on the income from their UK property rental business (PRB) and on capital gains from direct or indirect disposals of UK real estate. This marks a significant change for NRLs, which were previously subject to UK income tax on their PRB income and (until 6 April 2019) exempt from UK tax on their capital gains.
Parts I and II in this series discussed certain of the statutory predicates of credit bidding and some considerations for structuring such a bid. Here in Part III, we will address some additional issues that a lender must take into account when deciding to credit bid its debt and some documentary considerations. As its name implies, the predominant form of consideration in a credit bid is often the lender’s debt. Lenders, however, cannot ignore another component of consideration often needed to consummate a transaction, cash.
In Part I of this three part series we noted the likelihood that credit bidding will be more prevalent in today’s unpredictable economic environment and discussed some of the statutory backdrop. Here, in Part II, we will discuss certain mechanics that are associated with making, and later consummating, a credit bid.
For many secured lenders, the concept of credit bidding in bankruptcy is generally understood yet infrequently explored in practice. In today’s extremely uncertain economic environment, third-party alternatives may not present themselves as M&A activity and acquisition financing have slowed significantly with the spread of COVID-19. As a result, credit bidding could gain momentum as lenders look for self-help alternatives to maximize their recoveries.
Landlords are often among the very first to feel the impacts of their tenant’s financial woes. In today’s unpredictable economic environment, many businesses are forced to shut their stores temporarily while the risks of COVID-19 continue to play out. Within the last few days many large and small retailers have unilaterally announced publicly that they would not be paying upcoming rent. In these unprecedented times, landlords must be aware of the risks they face in light of what is certain to be a previously unheard of level of tenant defaults.
As COVID-19 cases continue to span the globe, a significant economic impact is being felt globally. Businesses have been disrupted, cash flows have been interrupted and economies have been thrown into a huge negative shock.
In many countries across the world, governments have amended their insolvency and corporation legislation, or enacted new legislation, in order to provide temporary relief to entities in financial distress as a result of the COVID-19 pandemic. This blog examines the impact of these measures alongside the current position in Hong Kong and Singapore.