Sophisticated real estate lenders spend significant amounts of time and energy attempting to insulate themselves from potential bankruptcy filings by their borrowers. A primary reason, which many an experienced real estate lender has found out the hard way, is the risk that a debtor in bankruptcy may “cram down” a plan of reorganization over its lender’s objection. Under a typical cramdown plan, a debtor may stretch out payments to its secured creditor for several years and attempt to replace its negotiated interest rate with a new, below- market rate of interest.

In addition to the general insolvency measures found in the Insolvency Act 1986, insurance intermediaries are subject to specific client money rules, which have a particular effect if they become insolvent. Though in the context of investment firms rather than the insurance sector, the recent UK Supreme Court case of Lehman Brothers International (Europe) (in administration) v CRC Credit Fund and ors [2012] UKSC 6 (LBIE) is a useful decision against which to consider the application of many of these client money rules.

Given the nature of their businesses, shipping companies may be involved as respondents in arbitration proceedings in different jurisdictions. As arbitrations tend to be lengthy procedures, a claimant to such proceedings may want to explore whether there are any quicker routes they can take to recover their losses. One such option they might consider is bringing a winding up petition against the company.

The slide and volatility in the oil price over the past few months has been dramatic and whilst many companies will be well positioned to weather the current climate, it has  already become clear that there are some players in the industry for whom insolvency is a very real  risk.

First publised in CRI

With the current financial difficulties faced by the oil & gas industry, directors of companies incorporated in England and Wales must be mindful of their duties and responsibilities to the company as well as the potential personal liability that could arise from breaching those duties and responsibilities in the context of an insolvency.

Who qualifies as a director?

Court of Appeal orders disclosure in relation to freezing order and cross-undertaking from a liquidator

A party with a statutory right to an admiralty claim in rem, which had issued its claim after the Admiralty court had ordered the sale of a vessel, did not lose its right to enforce the  claim¹. The claim in rem could be enforced against the sale proceeds provided that the person  liable in personam was the beneficial owner of the sale proceeds.

Facts

A recent decision by a New Jersey bankruptcy court scrambles the law regarding rejected trademark licenses.¹ Crumbs was a multi-location bakery that also licensed its trademarks and trade secrets to third parties. In July of 2014 Crumbs filed a Chapter 11 reorganization case and in August of 2014 the court entered an order selling substantially all of the assets of Crumbs to LFAC² free and clear of liens, claims, encumbrances, and interests.

In a case that should cause lenders heartburn, the United States District Court for the Western District of North Carolina recently ruled that common provisions in a Chapter 11 plan prevented the debtor’s lender from executing on a judgment against the non-debtor owner of the debtor.¹ Biltmore is a corporation² that operates manufactured home parks and sells and rents manufactured homes. McGee is the president and controlling shareholder of Biltmore. Biltmore filed Chapter 11 in January of 2011, and TD Bank was Biltmore’s largest secured creditor.