Summer 2024 Editor: Melanie Willems IN THIS ISSUE “Seething on a jet plane” - conditions precedent and time of the essence in commercial contracts by Jack Spence 03 09 11 24 Diamonds aren’t forever: who is vicariously responsible when they have been stolen?

On May 16th, the DOL released interim final rules (the “Final Rules”) and an amendment to Prohibited Transaction Exemption 2006-06 (the “Amendment to PTE”), effective July 16, 2024, amending the DOL’s Abandoned Plan Program (the “APP”) to allow Chapter 7 bankruptcy trustees to use the APP to terminate, wind up, and distribute assets from a bankrupt company’s retirement plan.

Chapter 15 of the Bankruptcy Code provides a valuable tool for non-US entities going through foreign insolvency proceedings when they have assets located in the United States. Chapter 15 can protect the value of US assets by granting a stay of actions against those assets during the concurrent administration of a complementary US insolvency process with that of the original foreign insolvency proceeding.

The Aldrich Pump Texas Two-Step bankruptcy may have survived dismissal at the bankruptcy court level, but now the asbestos claimants have appealed to the Fourth Circuit following Judge Whitley's approval of their motion for direct appeal.1

The Fifth Circuit recently issued an opinion that increases the marketability of estate assets often viewed as untouchable. In In re S. Coast Supply Co. ("South Coast"), 91 F.4th 376 (5th Cir. 2024), the Fifth Circuit held that a bankruptcy "preference" action may be sold to a third party under section 363 of the Bankruptcy Code even if the buyer is not an estate fiduciary and does not represent the bankruptcy estate. A preference action is an "avoidance" claim arising under section 547 of the Bankruptcy Code.

In a recent case, the Victorian Supreme Court said that an accountant ‘would know well that a statutory demand involves strict time frames for response and potentially very significant consequences for a company’. The accountant failed to take appropriate steps to inform the company of the statutory demand.

The statutory demand process

If a company does not comply with a statutory demand within 21 days of service, it is deemed to be insolvent and the creditor may proceed to wind up the company.

A recent court decision considers the legal principles and sufficiency of evidence when a court-appointed receiver seeks approval of their remuneration.

A court-appointed receiver needs court approval for the payment of their remuneration. The receiver has the onus of establishing the reasonableness of the work performed and of the remuneration sought.

In In re CII Parent, Inc.,¹ the Bankruptcy Court for the District of Delaware affirmed a secured lender’s prepetition exercise of its proxy rights and its subsequent removal and replacement of the directors/managers of the debtor’s non-bankrupt subsidiaries, effectively cutting off the debtor’s ability to pursue effective relief in the bankruptcy case.

It may be fair to say that non-US entities involved in a chapter 15 case, the mechanism through which US courts recognize foreign insolvency proceedings, do not anticipate having to litigate claims raised in the chapter 15 case outside of the bankruptcy court. This may be due in large part to 28 U.S.C. § 1334(c)(1), an abstention statute applicable in chapter 15 bankruptcy proceedings.

A modification of a Chapter 11 bankruptcy plan on the eve of the hearing on confirmation of that plan requires re-solicitation of votes and re-voting if the modification materially and adversely affects a class of claims or interests, i.e., equity holders, according to the Eleventh Circuit’s opinion in In re America-CV Station Group, Inc., 56 F.4th 1302 (11th Cir. Jan. 5, 2023).