Times are changing rapidly with the current flow of Coronavirus measures introduced to support businesses in debt and distress.
We take a look at what creditors can (and can’t) do to help better protect their position.
I’m owed money. What can I do?
Certain recent government measures may impede your ability to take recovery or enforcement action at the present time. The good news is that many avenues remain available.
You cannot (in some cases):
Americans are in an unemployment crisis due to COVID-19 business closings, and many are accruing debt in order to maintain their basic lives – unpaid utilities, buy food on credit, etc. For many, the vehicle to obtain that debt is credit cards, home-equity loans, or simply failing to pay creditors who invoice customers after providing goods and services, such as doctors.[1]
In a recent decision in the Supreme Court of NSW[1], Rees J set aside a liquidator’s bid to publicly examine two senior officers of the National Rugby League (NRL), finding that examination summonses issued by the liquidator were an abuse of process and the entire liquidation process was a contrivance in order to exert commercial pressure on the NRL.
The American bankruptcy process is geared towards providing (a) financially distressed businesses and individuals with a “fresh start” and (b) their creditors a fair opportunity to address their claims. Much of that process takes place in bankruptcy courts all over the country on a daily basis. So, what effect does a pandemic, such as the novel coronavirus (and its attendant disease, COVID-19), have on the administration of bankruptcy cases in the U.S.? Of course, the federal, state and local restrictions on public gatherings create a challenge for U.S.
The Coronavirus Economic Response Package Omnibus Bill 2020 (Coronavirus Response Bill) was passed on 23 March 2020 and received Royal Assent on 24 March 2020 following the Federal Government’s announcements made between 12 and 22 March 2020 of its economic response to the spread of the coronavirus pandemic.
The Coronavirus Response Bill provides, amongst other legislative amendments, for temporary changes of 6 months’ duration to Australian insolvency and corporations laws to assist in managing the sudden economic shock resulting from COVID-19.
In its recent decision in the ongoing Solar Shop litigation,[1] the Full Federal Court established two key principles which will have significant ongoing implications for the conduct of unfair preference claims:
The question of does a lien exist without a debt for it to secure is a complicated issue that unfortunately does not have a universal answer. This post will use two recent cases to explore concerns that counsel should examine if presented with this question.
A divided Sixth Circuit Court of Appeals panel ruled in the case of In re FirstEnergy Solutions Corp. on Dec. 12, 2019. The panel decided that the U.S. Bankruptcy Court and the Federal Energy Regulatory Commission (FERC) share jurisdiction when a Chapter 11 debtor moves to reject a power purchase and sale contract over which the FERC has jurisdiction (Power Contract). However, the Sixth Circuit noted that such jurisdiction is not equal; declaring the bankruptcy court’s authority as primary and superior to that of the FERC.
Loan servicers’ employees are human beings. Loan servicing employees use systems designed by other human beings. We all know this and so should anticipate that there will be mistakes in loan servicing operations. Recently, the Seventh Circuit Court of Appeals reminded us that how loan servicers plan for and react to inevitable mistakes is important. The case also has some good reminders for litigation counsel and planning tips for loan servicers.
In Carrello,[1] the Federal Court granted a warrant under section 530C of the Corporations Act 2001 (Cth) (the Act) allowing the liquidator of Drilling Australia Pty Ltd (the Company) to search and seize property, books and records located in storage containers belonging to the Company.