The Supreme Court’s recent decision in Merit Management Group, LP v.

The High Court delivered a stark reminder to personal insolvency practitioners (PIPs) that they serve an integral role in upholding the legitimacy of the bankruptcy process in a judgment delivered on 5 February 2018.

Background

The judgment arose out of an application by the Official Assignee (“OA”) to postpose the automatic discharge of a bankrupt. The OA submitted that the bankrupt had hidden assets from or failed to disclose assets which could have been realised for the benefit of the creditors of her estate.

Distressed and special situations investors should take note of the U.S. Bankruptcy Court’s recent decision in Oi’s Chapter 15 case. We present our takeaways for investors.

Court of Appeal judgment: Burlington Loan Management and others v Lomas and others (as the joint administrators of Lehman Brothers International (Europe) (in administration)) [2017] EWCA Civ 1462

Summary and background

Introduction

On 29 June 2017 the High Court made an order for costs against the three former directors of Custom House Capital (the “Company”) having already disqualified them from acting as directors for periods in excess of ten years. The judgment was unusual because the order for costs was not just in relation to the legal costs but also for the very significant investigative costs of the Official Liquidator.

Background

In the recent decision of Re JD (a debtor), the High Court upheld a debtor’s challenge to a lender’s decision to reject a Personal Insolvency Agreement (“PIA”) proposal.

Section 115A of the Personal Insolvency Acts 2012- 2015 (“the Acts”) provides a new mechanism by which a debtor may seek the Court’s approval of a PIA notwithstanding its rejection by creditors.

This case is particularly significant as:

Introduction

With the commencement of the Companies Accounting Act 2017 (“2017 Act”) on 9 June 2017, the priority of charges in liquidations has been dramatically altered.

Judicial Development

The recent judgment in MB Refrigeration and Air-conditioning Limited (in liquidation) –v- Allied Irish Bank Plc [2016] has clarified what constitutes “notice” of the liquidation of a company for creditors and banks alike.

On 23rd November 2016, the European Commission released a package of banking legislation reforms. Some of these were expected in particular those related to the minimum requirement for eligible liabilities and own funds (MREL) under the Bank Recovery and Resolution Directive (BRRD) and the implementation of the Financial Stability Board's (FSB) total loss absorbing capacity (TLAC) principles into the MREL requirements.

WATERFALL IIC JUDGMENT (ISDA MASTER AGREEMENT ISSUES)1