The ability to assume or reject executory contracts is one of the primary tools used by debtors in a Chapter 11 reorganization. Where a debtor has a contract with a third party that is “executory”—meaning that ongoing performance obligations remain for both the debtor and the contract counterparty on the date of the bankruptcy filing—the debtor can choose to either assume or reject the contract under 11 USC § 365.

Subordination agreements are generally enforced in accordance with applicable non-bankruptcy law in bankruptcy cases. The decision in In re Fencepost Productions, Inc., No. 19-41542, 2021 WL 1259691 (Bankr. D. Kan. Mar. 31, 2021) recognizes limits to this rule. While the subject subordination agreements were generally enforceable, the assignment of Chapter 11 voting rights in such agreements was not.

On 20 May 2021, the UK government published a consultation paper in which it set out its proposals to revise the current regime for insolvent insurers (excluding Lloyd’s underwriters). The proposals seek to clarify and enhance aspects of the existing “write-down” power of the court under Section 377 of the Financial Services and Markets Act 2000.

Most corporate bankruptcy filings result in either a plan of reorganization under Chapter 11 of the Bankruptcy Code (the Code) or a liquidation under Chapter 7 of the Code. Sometimes, however, neither option is viable and the debtor may need to seek a “structured dismissal” in accordance with Section 349 of the Code. Structured dismissals provide administratively insolvent debtors with a framework to distribute the estate’s remaining assets (without the additional cost of a Chapter 7 liquidation), wind down the estate, and obtain final dismissal of the case.

Swissport Belgium, one of the two licensed ground handling service providers at Brussels Airport, was declared bankrupt in June 2020, three months after the airport's operations were interrupted due to measures adopted by the Belgian government to limit the spread of COVID-19. Nearly 1,500 workers lost their jobs.

In order to support these workers, Belgium applied for assistance from the European Globalisation Adjustment Fund (EGF) to help these redundant workers back into employment (especially those with no professional qualifications or with a low level of education).

US Bankruptcy Judge Mary F. Walrath of the District of Delaware entered an order on April 21 in In re Nine Point Energy Holdings, Inc., Case No. 21-10570 (MFW) (Bankr. D. Del. Apr. 21, 2021), finding that Caliber Measurement Services LLC, Caliber Midstream Fresh Water Partners LLC, and Caliber North Dakota LLC (together, Caliber) violated the automatic stay by sending “reservation of rights” letters to third parties that were providing services allegedly in violation of agreements between Caliber and Nine Point Energy Holdings, Inc.

As requested by practitioners for several months, the legislator has finally amended the Belgian Code of Economic Law to complete the range of tools available to companies in distress to allow them achieve their financial recovery. The publication of these amendments in the Belgian Official Gazette took place on Friday 26 March 2021, making them effective immediately.

The main amendments are as follows:

The German Act on the Further Development of the Restructuring and Insolvency Law (Sanierungs- und Insolvenzrechtsfortentwicklungsgesetz – SanInsFoG) took effect on January 1, 2021, transforming the European Restructuring Directive of June 20, 2019 ((EU) 2019/1023) and introducing a self-administrated restructuring option outside the standard insolvency proceeding.

The Pre-Insolvency Restructuring Plan

The US Court of Appeals for the Tenth Circuit has ruled that proceeds from property that was fraudulently transferred cannot be recovered under Section 550 of the Bankruptcy Code.[1] This decision limits a subsequent recipient’s exposure where the initial transferee of the property had altered the form of the property that was initially received prior to transferring it to that subsequent recipient.

The Main Street Lending Program is designed to help companies that were in sound financial condition prior to the COVID-19 pandemic to maintain their operations and payroll until conditions normalize. This White Paper gives a broad understanding of the program’s terms and implications by delving into the key questions that market participants are likely to have about the program and addressing the latest changes implemented in the final legal forms and agreements.