The economic impact of forced budget cuts from the sequester and other government funding crises—ranging from a government shutdown to the federal debt limit—and congressional gridlock place disproportionate pressure on smaller- or second tier-government contractors. Business partners of a financially infirm contractor must prepare for when a contract business partner, co-venturer, or teaming partner falls over the fiscal cliff and files for bankruptcy protection. In this article, we will provide an over
The United States Court of Appeals for the Tenth Circuit, applying Oklahoma law, has held that a bankruptcy or insolvency exclusion may bar coverage for the insured broker’s claim, where the broker’s actions were connected to the bankruptcy of its client’s former insurer. C.L. Frates & Co. v. Westchester Fire Ins. Co., 2013 WL 4734093 (10th Cir. Sept. 4, 2013).
Applying Pennsylvania law, the United States District Court for the Eastern District of Pennsylvania has held that an insured’s failure to notify its insurer of a potential claim violated the notice provision of the policy. Pelagatti v. Minn. Lawyers Mut. Ins. Co., 2013 WL 3213796 (E.D. Pa. June 25, 2013). In so doing, the court held that the insurer was not required to show that it was prejudiced by the late notice and that whether the insured’s failure to provide timely notice negates coverage is determined under a “hybrid subjective/objective test.”
In its decision of 11 July 2013, Reference No. 21 ICdo 21/2012, the Supreme Court of the Czech Republic comprehensively expressed its opinion on the substantive legal aspects of re-pledging a receivable burdened by a lien and the possibility of negotiating a contractual waiver of re-pledging receivables. According to the decision, the pledging of a receivable does not preclude the possibility of establishing another lien on the same receivable. This decision is crucial for pledgees, typically financing banks.
Case background
Under the Bankruptcy Code, a lawsuit to recover avoidable preference payments must be filed prior to the expiration of the statute of limitations. Specifically, such lawsuits must be commenced before the later of 1. two years after the commencement of the case or 2. one year after the appointment or election of the first Trustee, provided that the two-year period has not already expired.
The United States District Court for the Middle District of Pennsylvania has held that an E&O policy issued to a now-bankrupt credit counseling company did not cover claims arising under unfair trade practices statutes, but did cover claims arising under fair debt collection statutes. Hrobuchak v. Fed. Ins. Co., 2013 WL 2291875 (M.D. Pa. May 24, 2013). The court also held that carve-outs from the policy’s definition of loss did not preclude coverage for statutory damages or damages representing the return of fees paid to the insured.
With effect as per 1 July 2013, the Austrian legislator has enacted an amendment to the Limited Liability Companies Act (GesRÄG 2013) providing primarily for a de-crease of the minimum share capital to EUR 10,000, as well as a decrease of the formation costs. These changes are aimed at maintaining Austrian limited liability companies’ competitiveness in comparison to other European limited capital compa-nies and to fostering the formation of new limited liability companies also by small service providers.
In the case, the insolvency proceedings had not been used for the purposes provided by Law 85/2006 on insolvency proceedings (Law 85) but for other purposes.
Banks in Bulgaria are seriously concerned with borrowers fraudulently manipulating their accountancy books with the effect that banks’ security interests are declared invalid and banks are declassed into ordinary (unsecured) insolvency creditors.