Background

The Times revealed in an article last month that, according to a report from the Audit Reform Lab, a think tank at the University of Sheffield, only a quarter of the 250 largest companies listed on the London Stock Exchange to become insolvent between 2010 and 2022 had a “going concern” warning included by their auditors in what would turn out to be their final set of accounts. Of those companies 38 also declared a dividend in those accounts.

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.

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.

Since the implementation of the Insolvency, Restructuring and Dissolution Act 2018 (the IRDA), liquidators and judicial managers in Singapore have been statutorily authorised to use third-party funding for a range of claw-back actions. They are also able to transfer company assets to funders; to assign the fruits of legal actions to funders; and to grant super-priority to funders.

Is a court order necessary for security interests granted after the appointment of external administrators? Perhaps not.

Two recent court decisions may indicate more uncertainty with respect to the enforceability of “make-whole” premiums in bankruptcy. Make-whole or prepayment premiums are common within loan agreements, bond issuances and other debt instruments.

These are unprecedented times for businesses trying to manage the challenging impact of inflation, labour shortages, supply interruptions, elections, fires, floods, wars and a pandemic. It is more important than ever to manage working capital, mitigate risk and monetise assets.

The section: Section 553C of the Corporations Act 2001 (Cth) (“Act”) provides for a statutory set-off between an insolvent company and a party seeking to have a debt or claim admitted in the company’s winding up.