We’ve all heard it said a million times - if it sounds too good to be true, it probably is. But does that age-old maxim apply to a bankrupt customer offering to pay you 100% of your unsecured claim through a “prepackaged” bankruptcy or under a critical vendor program? The answer can be complicated. 

This article explores what it means to be “unimpaired” and paid in full in prepackaged bankruptcies and under critical vendor programs and outlines some of the potential pitfalls that can be faced by unsecured creditors under these scenarios.

The Supreme Court this week resolved a long-standing open issue regarding the treatment of trademark license rights in bankruptcy proceedings. The Court ruled in favor of Mission Products, a licensee under a trademark license agreement that had been rejected in the chapter 11 case of Tempnology, the debtor-licensor, determining that the rejection constituted a breach of the agreement but did not rescind it.

Can a Creditors Voluntary Arrangement (CVA) lead to a stay in the enforcement of an adjudicator’s decision?

In January of this year the Court of Appeal refused to stay enforcement of an adjudication award due to a CVA ((1838) Cannon Corporate Limited v Primus Build Limited [2019] EWCA Civ 27). Four months later another enforcement decision against a company subject to a CVA came before the Technology and Construction Court (TCC). This time a stay was granted – so what was the difference?

A party on the receiving end of an adjudication is usually in a difficult position. Its situation is only made worse if the referring party is insolvent.

In such a situation, if the adjudicator makes an award in favour of the insolvent company the chances of subsequently recovering any sums awarded in litigation are very limited. While a stay to enforcement may be available, there are costs associated with obtaining a stay which will probably also be irrecoverable.

Few issues in bankruptcy create as much contention as disputes regarding the right of setoff. This was recently highlighted by a decision in the chapter 11 case of Orexigen Therapeutics in the District of Delaware.

A trustee in bankruptcy lost all rights to the proceeds of sale of a freehold property after he disclaimed title to it

Background

Mr Sleight was the trustee in bankruptcy of an insolvent estate. The deceased’s assets included several freehold properties that were charged to banks where the value of the property was less than the amounts due under the charges. Given the negative equity, the trustee in bankruptcy disclaimed title to these properties as they constituted “onerous property”.

Pensions New (PN) has often had cause to ask himself what he knows.  A similar sort of question was frequently posed by the French essayist, Michel de Montaigne.  Montaigne lived between 1533 and 1592 and he answered this question over the course of a period of time during which he produced several volumes of great essays.  In those volumes, Montaigne covered many subjects however he never covered the subject of the occupational defined benefit pension scheme.  So far PN knows, this is the first article ever written about Montaigne’s relationshi

On 31 October 2018 the Supreme Court issued its Judgment in the appeal of Dooneen Ltd (t/a McGinness Associates) and another (Respondents) v Mond (Appellant) (Scotland) [2018] UKSC 54.

The appeal had been brought by Mr Mond who had sought to overturn the decision of the Inner House of the Court of Session (Dooneen Ltd & Others V Mond [2016] CSIH 59).

Factual background

The judicial power of the United States is vested in courts created under Article III of the Constitution. However, Congress created the current bankruptcy court system over 40 years ago pursuant to Article I of the Constitution rather than under Article III.

Southeastern Grocers (operator of the Winn-Dixie, Bi Lo and Harvey’s supermarket chains) recently completed a successful restructuring of its balance sheet through a “prepackaged” chapter 11 case in the District of Delaware. As part of the deal with the holders of its unsecured bonds, the company agreed that under the plan of reorganization it would pay in cash the fees and expenses of the trustee for the indenture under which the unsecured bonds were issued.