The applicant applied to strike out a winding up petition that had been presented against it. The parties had entered into two construction contracts under which the applicant had subcontracted the fabrication and erection of steelworks to the respondent in relation to two separate sites. The contracts failed to provide an adequate mechanism for payment such that the Housing Grants, Construction and Regeneration Act 1996 (as amended) (HGCRA 1996) and the Scheme for Construction Contracts (England and Wales) Regulations 1998 (as amended) applied.

Picard, a trustee in bankruptcy, launched proceedings under the anti-avoidance provisions of the US Bankruptcy Code against Vizcaya, a BVI investment fund which had invested approximately $330m with Bernard Madoff via his New York firm. Prior to his fraud being discovered in late 2008, Vizcaya had been repaid $180m.Picard obtained a judgment against Vizcaya and its shareholders in the New York Bankruptcy Court. The judgment against Vizcaya was for $180m, $74m of which had been transferred to its Gibraltar holdings.

OTL was placed into compulsory liquidation. Prior to this it transferred monies to a trust located in HK of which N was perceived to be the principal trustee. The OR as liquidator applied for an order under s 236(3) of the Insolvency Act 1986 (IA 1986) that N produce a witness statement with supporting documents in relation to the company’s affairs. The primary question for HHJ Hodge QC was whether s 236(3) of the IA 1986 could have extra-territorial effect as N was resident in HK.

Held

The Court of Appeal upheld the finding at trial of HHJ Bird (sitting in the High Court) that save where there is fraud, a debtor is not legally obliged to volunteer information to an assignee regarding his arrangement with the assignor. The dispute arose because Bibby, a factor (and ‘Assignee’), purchased debts from Morleys Ltd (‘the Assignor’), owed to it by HFD Ltd and MCD Ltd (the ‘Customers’/‘Debtors’). The contract between the Assignor and Customers was such that the latter were entitled to a rebate, at the beginning of each calendar year, on purchases made.

Summary

This is the sixth in a series of alerts regarding the proposals made by the American Bankruptcy Institute Commission to Reform Chapter 11 Business Bankruptcies (the “Commission”). This alert covers the Commission’s recommendations regarding Chapter 11 plans of reorganization and Chapter 11 dismissal orders. It discusses the Commission’s proposed changes to plan confirmation and voting procedures, approving settlements contained in the plan, and releasing insiders from liability.

1. Recommended Changes to Confirmation and Voting Requirements.

Having successfully obtained judgment for your client in a case where your firm of solicitors is acting under a conditional fee agreement (CFA), it is only natural that thoughts will turn to the firm’s own impending financial reward. But the terms of a CFA, negotiated at the outset of the case, can prove to be a barrier to their underlying commercial purpose: payment by result.

Section 262(1) of the IA 1986 provides that a debtor, creditor or nominee may apply to the court where: (a) a voluntary arrangement approved by a creditors’ meeting summoned under section 257 unfairly prejudices the interests of a creditor of the debtor, or (b) there has been some material irregularity at or in relation to such a meeting. 

The confusion over Bitcoin grows in the latest lawsuit brought in a California bankruptcy court by Trustee Mark Kasolas against Marc Lowe, a former employee of HashFast Technologies LLC.

The trustee alleges, among other things, that Lowe received from the bankrupt Bitcoin mining company fraudulent transfers which included 3,000 Bitcoin (“BTC”) in September 2013, valued at approximately $363,861.

Bankruptcy practitioners routinely advise secured creditor clients to file protective proofs of claim in bankruptcy proceedings despite those clients’ ability to ignore bankruptcy proceedings and decline filing claims without imperiling their lien due to the protections afforded by state law foreclosure rights.^[1] But a recent Ninth Circuit decision is causing attorneys and clients to reconsider whether this traditionally conservative approach is simply too risky in Chapter 13 cases. HSBC Bank v. Blendheim (In re Blendheim), No. 13-35412, 2015 WL 5730015 (9th Cir. Oct.