On December 22, 2011, the United States Bankruptcy Court for the District of Delaware inIn re JER/Jameson Mezz Borrower II LLC 1 dismissed with prejudice a mezzanine borrower’s bankruptcy case for bad faith under Section 1112(b) of the Bankruptcy Code. In doing so, the court clarified that the standard in the Third Circuit to evaluate the good faith of a debtor seeking shelter under the umbrella of Chapter 11 of the Bankruptcy Code is an objective one and does not consider the subjective good faith of a debtor as do courts within the Secon d Circuit.
The Court of Appeal has clarified in the case of Key2law (Surrey) LLP v Gaynor De’Antiquis [2011] EWCA Civ 1567 that administration proceedings do not constitute “insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor” in terms of regulation 8(7) of the TUPE Regulations 2006 and therefore fall outside the scope of regulation 8(7).
Generic Legal Advice Memorandum AM 2011-003 (August 18, 2011)
Overview
In its judgment of 11 October 2011, the English Court of Appeal analysed the terms of an aircraft purchase agreement (the “Agreement”) entered into by Gesner and the aircraft manufacturer Bombardier. The Agreement was in Bombardier’s standard terms. Gesner, the purchaser, sought to terminate the agreement on the grounds that Bombardier had delayed in fulfilling its contractual obligations. Thereafter, Bombardier sought to retain certain monies as liquidated damages upon termination of the Agreement. Gesner challenged this retention.
Application for an administration order in respect of FM Front Door Ltd. The application followed FM’s failure to make payments under a loan from the Dunfermline Building Society obtained to assist with the purchase of flats at the Skyline development on Finniestoun Street in Glasgow. The loan was secured by a floating charge and standard securities over each of the flats. FM’s parent company FM Developments also granted a guarantee for the loan.
Clause 13 of the loan agreement provided that the grounds for default included:
The Second Circuit Court of Appeals has now weighed in on the Bankruptcy Code’s safe harbor provisions. In Enron Creditors Recovery Corp. v. Alfa, S.A.B. de C.V., Docket Nos. 09–5122, 09–5142, 2011 WL 2536101 (2d Cir. June 28, 2011), the Second Circuit Court of Appeals faced an issue of first impression—whether Section 546(e) of the Bankruptcy Code, which shields certain payments from avoidance actions in bankruptcy, extends to an issuer’s payment to redeem its commercial paper made before maturity.
In Lehman Brothers Special Financing, Inc. v. Ballyrock ABS CDO 2007-1 Limited (In re Lehman Brothers Holdings, Inc.), Adv. P. No. 09-01032 (JMP) (Bankr. S.D.N.Y. May 12, 2011) [hereinafter “Ballyrock”], the United States Bankruptcy Court for the Southern District of New York held that a contractual provision that subordinates the priority of a termination payment owing under a credit default swap (CDS) to a debtor in bankruptcy, and which caps the amount of the termination payment, may be an unenforceable ipso facto clause under section 541(c)(1)(B).
You will rely on section 355 for nonrecognition, but here you also must rely on section 332 to make the liquidations tax free, without any liquidation-reincorporation problem. It's very clear that you can get the results you want, but not clear why.
LTR 201123022 describes these facts, in simplified form:
In Geltzer v. Mooney (In re MacMenamin’s Grill, Ltd.), Adv. Pro. No. 09-8266 (Bankr. S.D.N.Y. April 21, 2011), the United States Bankruptcy Court for the Southern District of New York held that the safe harbor in section 546(e) of the Bankruptcy Code does not apply to a small, private leveraged buyout (LBO) transaction that posed no systemic risk to the stability of the financial markets.
A recent Supreme Court judgement has confirmed that where an individual, Mr X, acts as director of company A, and company A is the sole director of company B, that will not necessarily make Mr X a “de facto” director of company B.
The Court decided that the mere fact of acting as a director of a corporate director was not enough to render the individual a de-facto director, “something more” would be required, such as the director holding himself out in correspondence as a director of company B.