Dubai's announcement on 25 November 2009 that it would seek a standstill (the "Standstill Announcement") on the debt of Dubai World, a Government of Dubai holding company, whose principal business activities include the master developers Nakheel and Limitless, port operator DP World, and investment house Istithmar, caused a considerable impact across world markets and widespread comment amongst the world media.

Following the Standstill Announcement a number of significant events and further announcements have taken place, principal amongst these have been:

In an Opinion issued on December 2, 2009 in the Washington Mutual, Inc. ("WaMu") Chapter 11 case, the Delaware Bankruptcy Court held that Bankruptcy Rule 2019 clearly applies to "ad hoc committees," regardless of how they might try to disclaim collective action. As a result, the members of an informal group of WaMu bondholders must now provide detailed information concerning their holdings, including a history of when they bought and sold their bonds and the prices paid. Perhaps more importantly, the Opinion packs a second bombshell.

In a recent action, Granite Re filed suit against Federal Crop Ins. Corp., Risk Management Agency and Ann Frohman, in her capacity as Liquidator for the insolvent insurer, American Growers Ins., alleging that Growers owes unpaid reinsurance premiums to Granite Re. Following removal to Federal Court, the Liquidator moved to dismiss, advising that she claims no interest in the outcome of Granite Re’s litigation against FCIC/RMA and she will therefore forego any right she may have had to remain in the litigation as an interested or intervening party.

In the chapter 11 proceedings for ION Media Networks, a distressed fund (Cyrus) purchased second lien debt and then employed what the Court characterized as "aggressive bankruptcy litigation tactics as a means to gain negotiating leverage." In a November 24, 2009 Memorandum Decision, Judge James Peck of the United States Bankruptcy Court for the Southern District of New York stopped Cyrus in its tracks, holding that the Intercreditor Agreement (ICA) between the first lien and second lien lenders would be enforced to deny Cyrus (i) the ability to assert that certain assets were outside of th

The Scottish Court of Session Decisions has nixed a scheme of arrangement under the UK Companies Act of 2006, stating it could not be judicially sanctioned without the assent of all creditors. A scheme of arrangement is a reorganization device in which, with the approval of at least three-quarters of a company’s creditors, the company may compromise the claims of all its creditors. A somewhat analogous device might be a “cram-down” under U.S. bankruptcy law, with the important distinction that a scheme of arrangement may be used even by a solvent company.

In U.S. v. Apex Oil, a three-judge panel of the Seventh Circuit ruled 3-0 that EPA’s cleanup injunction against the corporate successor to a chemical company was not discharged in Chapter 11 because the injunction does not create a right to payment and, consequently, is not a ‘debt’ under the Bankruptcy Code.

Reliance Insurance Company, which had consented to the entry of an Order of Rehabilitation by the Commonwealth Court of Pennsylvania on May 29, 2001, and which was ordered by the court into liquidation on October 3, 2001, reached a Commutation, Settlement Agreement, and Release with its reinsurer, Munich Reinsurance America. The Settlement Agreement is dated December 29, 2008.

Only twice has the U.S. Supreme Court spoken directly to environmental issues in bankruptcy – until now. Today the Supreme Court ruled that certain claims can in fact be barred by a bankruptcy court's channeling injunction. The case is particularly important in light of the major corporate bankruptcies now under way in the industrial sector, where environmental costs can drive the success or failure of a restructuring.

Century Indemnity Company (“CIC”) reinsured The Home Insurance Company (“Home”). Due to Home’s liquidation proceedings, which began in 2003, CIC became fully liable for a $13 million settlement of certain environmental claims for which CIC and Home were both primarily liable under the parties’ respective insurance contracts. CIC, a debtor in the Home proceedings, sought a setoff of $8 million against other obligations owed to Home, for Home’s share of the settlement that CIC paid in full. The New Hampshire Supreme Court reversed the trial court’s order permitting the setoff.

As previously reported (3/17/08 post), this case involves the interpretation of the terms of a reinsurance contract and the duties of the parties under that contract. In the most recent development, the Eighth Circuit affirmed the Bankruptcy Appellate Panel’s judgment affirming in part, and reversing in part, a prior decision of the bankruptcy court regarding the reinsurance contract at issue.