1. Introduction
The longstanding debate surrounding the prioritization of crown debts vis-à-vis private debts has entered a new chapter with the advent of the Insolvency and Bankruptcy Code, 2016 (“IBC”). Prior to the IBC, the common law principle generally granted crown debts preferential status over unsecured debts. This historical primacy stemmed from the sovereign's role as the embodiment of the public good, requiring unimpeded revenue collection for the smooth functioning of the State.
In a welcome clarification for administrators, the UK Supreme Court in the recent case of R (on the application of Palmer) v Northern Derbyshire Magistrates’ Court[1], held that an administrator appointed under the Insolvency Act 1986 (IA 1986) is not an “officer” of the company for the purposes of section 194(3) of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
In this client alert, we set out the key findings by the Court of Appeal in Darty Holdings SAS v Geoffrey Carton-Kelly [2023] EWCA Civ 1135, which considers an appeal against the High Court decision that a repayment by Comet Group plc (“Comet”) of £115 million of unsecured intra-group debt to Kesa International Ltd (“KIL”) was a preference under section 239 of the Insolvency Act 1986 (the “Act”).
Background to the Case
Whilst commonplace in the U.S., uptier transactions in which a borrower teams up with a subset of creditors to issue new “super priority” debt by amending or exchanging existing debt documents, have not been widely used in Europe.
However, with increasing macro economic pressures and financial market instability, we may see more European borrowers taking advantage of flexibility in cov-lite debt documentation to implement liability management transactions as an alternative to, or even as part of, more formal restructurings.
Introduction
Barely six years since the enactment of the Insolvency and Bankruptcy Code, 2016 (“Code”), the Code has already undergone various amendments from to time, to aid its broad objective of time bound insolvency resolution, maximisation of value of assets of corporate debtors and balancing the interests of all stakeholders. Besides the amendments, judicial pronouncements have also played an instrumental role in shaping the Code in its present form.
This week, the Ninth Circuit addresses whether text messages can violate the Telephone Consumer Protection Act’s prohibition on “prerecorded voice” messages, and it considers whether debtors who paid statutory fees under an unconstitutionally nonuniform bankruptcy provision are entitled to a refund.
2023 has been a remarkable year with the past several months displaying an upward trend for the Business Restructuring + Insolvency Group at Morrison Foerster. We would like to provide our friends and clients with an overview of our current matters, each of which demonstrate our track record of being a go-to firm for complex restructurings across industries and jurisdictions.
Summary
This week, the Court considers a property owner’s claim to an easement over a maintenance road on federal land, and casts doubt on the longstanding “person aggrieved” standing requirement in bankruptcy appeals.
KIMBALL-GRIFFITH, L.P. v. BRENDA BURMAN, ET AL
The Court rejects a property owner’s claim to an easement over a maintenance road on federal land.
The extant regulatory framework for Asset Reconstruction Companies (“ARCs”) has been amended by the Reserve Bank of India (“RBI”), vide its notification titled ‘Review of Regulatory Framework for Asset Reconstruction Companies (ARCs)’ dated 11th October 2022 (“Framework”).
Key Changes:
Some of the key changes brought about by the Framework are as follows: