Fourteen former MF Global executives, including Jon Corzine, the former chairman and chief executive officer, are entitled to access most of a US $200 million directors and officers liability insurance policy purchased by MF Global Holdings prior to the firm filing for bankruptcy in October 2011, under the decision of a US bankruptcy court in NYC last week. The executives had previously made a motion to access the insurance.
The new law extends the grounds for shareholders’ liability and invalidation of transactions.
On 26 March 2014, the new Rehabilitation and Bankruptcy Law (the New Law) took effect in Kazakhstan. The New Law supersedes the Bankruptcy Law adopted in 1997 (the Old Law).
The US District Court for the Western District of Washington (the "District Court") recently affirmed a bankruptcy court decision that prohibited a transferee of a secured lender's interest in a loan from voting on a debtor's plan of reorganization on the grounds that such transferee, a distressed debt investor, was not an Eligible Assignee under the applicable loan agreement.Meridian Sunrise Village, LLC v. NB Distressed Debt Investment Fund Ltd., et al., No. 13-5503 (W.D. Wash. March 6, 2014) (In re Meridian Sunrise Village, LLC).
Background
The theory of universality in insolvency, along with globalisation, has gained much traction across many jurisdictions in recent years. Briefly, the universality theory proposes that an insolvency proceeding has worldwide effect over all the assets of the insolvent company, wherever they may be.
The US Court of Appeals for the Eleventh Circuit recently issued the first appellate decision holding that, in actions brought by the Federal Deposit Insurance Corporation (FDIC), the officers and directors of failed banking institutions can assert affirmative defenses relating to the FDIC’s post-receivership conduct.
In a decision of significance to the distressed claims trading community, the US Court of Appeals for the Third Circuit in In re KB Toys Inc.[1] recently held that any risk or “cloud” of disallowance under the Bankruptcy Code resulting from a creditor’s receipt of an avoidable transfer cannot be separated from a claim, even when such claim is in the possession of a subsequent transferee.
The Supreme Court of the State of Delaware recently reversed a Court of Chancery decision declining to appoint a receiver for a dissolved Delaware corporation, Krafft-Murphy Company, Inc. (Krafft). The Chancery Court determined that a receiver was inappropriate because Krafft had no property for the receiver to distribute to potential tort victims. The Supreme Court disagreed, holding that an unexhausted insurance policy is property of the dissolved company even after its three-year wind-up period under Delaware law.
On October 30, 2013, Brazilian oil company OGX Petróleo e Gas Participações SA (OGX) filed for bankruptcy protection (or “judicial reorganization”) in Rio de Janeiro after restructuring discussions between the company and its major creditors ended without agreement. With nearly $5 billion of debt, OGX is the largest and most complex bankruptcy proceeding to be conducted in Latin America and will not only test Brazil’s nascent bankruptcy law, but also presents itself as the latest potential opportunity for distressed investors focused on Latin American emerging markets.
The term “globalisation” is associated with expansion and the free movement of capital and resources. Funds raised in Country A can be invested in a variety of different countries for better returns. In times of economic expansion, it can be unfashionable to consider insolvency issues. This may explain why insolvency practitioners find themselves holding many discussions among themselves.
High Court holds that reports used by the Serious Fraud Office to obtain search and arrest warrants are not subject to litigation privilege in subsequent civil proceedings.