The U.S. Supreme Court held last week in Truck Insurance Exchange v. Kaiser Gypsum Co. that an insurance company with financial responsibility for bankruptcy claims is a “party in interest” with the right to object to a Chapter 11 reorganization plan.
Section 1109(b) of the Bankruptcy Code provides:
The Business Support and Insolvency Team at Boyes Turner acted for the joint liquidators who made a successful application for their retrospective appointment as liquidators of a company.
The case
It is sometimes the case that a person who owes you money dies before they have repaid the same to you. In this article, we explore what happens to the debt and the options available to creditors who are faced with a deceased debtor.
What happens to debt after death?
The deceased’s liability to repay a debt does not cease upon his or her death. Instead, liability for the same transfers to the deceased’s estate, providing that their estate is not insolvent.
What happens to debt if the estate is insolvent
A winding up petition is a legal document that can be served by a company’s creditors when they are owed money by the company. If the debt amounts to £750 or more, then a creditor has the right to go to court and ask for a winding up petition to be issued, although courts view this remedy as something that should be reserved for when a company is genuinely believed to be insolvent, and not simply used as a means of debt collection.
The recent rise in company insolvencies has been driven by a high number of creditors’ voluntary liquidations (CVL). The outlook for the rest of 2023 is that there will be an even higher number of companies entering a formal insolvency process in almost every sector and industry.
A high proportion of these insolvencies are small businesses (SME’s), some of which had managed to keep going with the help of Government-led support packages and bounce back loans, but with rising interest rates and inflation, they are now struggling to repay loans and obtain financing.
If a company becomes insolvent, it is crucial that its directors comply with their legal duties. Failure to do so can result in personal liability for the company’s debts as well as legal action and disqualification from being a company director or being involved in a company in the future.
We look at exactly what a director’s duties on company insolvency are and some of the risks to be aware of in dealing with an insolvency.
What is insolvency?
This article originally appeared in Vol. 52 of Kentucky Trucker, a publication of the Kentucky Trucking Association.
Purchasers often relish the prospect of buying distressed assets in a bankruptcy proceeding. Under section 363 of the Bankruptcy Code, a buyer may obtain ownership of bankruptcy estate assets “free and clear of any interest” (assuming certain conditions are met), and also be reasonably confident that the sale will not be reversed on appeal. But the U.S. Supreme Court may have now tempered that confidence. In its recent, unanimous opinion, MOAC Mall Holdings LLC v. Transform Holdco LLC, No. 21-1270 (Apr.
SVB Financial Group, the corporate parent of Silicon Valley Bank, filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York on March 17. According to a press release issued by SVB Financial Group, its related entities SVB Securities and SVB Capital are not included in the Chapter 11 filing. This bankruptcy filing comes a week after regulators took control of the failed Silicon Valley Bank.