The recent case of Re J T Frith Ltd [2012] EWHC 196 (Ch) shows:
- how secured lenders may surrender their security in order to participate in the prescribed part available for unsecured creditors on insolvency; and
- how intercreditor deeds may be worded to allow senior secured creditors to participate in the prescribed part, despite retaining their security.
Background
Summary
The High Court has held in the “Extended Liens” application that a “general lien” granted by a client of Lehman Brothers International (Europe) (“LBIE”) over financial collateral held by LBIE as security for obligations owed by the client to LBIE or any other Lehman entity was a valid floating charge, both in relation to the client’s debts to LBIE and its debts to LBIE’s affiliates.
On 1 November 2012, the High Court gave judgment in favour of the Special Administrators (“SAs”) of MF Global UK Ltd (“MFGUK”), in relation to a claim by MF Global Inc (“MFGI”) arising from certain repo-to-maturity transactions (the “RTM Application”). These transactions concerned the repo of European debt securities by MFGI to MFGUK, which were governed by a Global Master Repurchase Agreement (“GMRA”).
This update highlights developments in the administration of MF Global UK (“MFG”) since our last alert dated 15 June 2012.
Estimated outcomes
Assenagon Asset Management S.A. v Irish Bank Resolution Corporation Limited (formerly Anglo Irish Bank Corporation Limited) [2012] EWHC 2090 (Ch)
The Court’s unanimous decision in RadLAX Gateway Hotel LLC v. Amalgamated Banksettles dispute over the credit-bid right, retaining this important creditor protection.
In Stern v. Marshall, 564 U.S. ____ (June 23, 2011), the U.S. Supreme Court, in a 5-4 decision, held that the bankruptcy court could not, as a constitutional matter, enter a final judgment on a counterclaim that did not arise under Title 11 or in a case under Title 11, even though 28 U.S.C. § 157(b)(2)(C) expressly permits it to do so. In a dispute concerning the estate of the late J. Howard Marshall II, Pierce Marshall filed a complaint in Vickie Lynn Marshall’s bankruptcy case alleging that Vickie defamed him and that such defamation claim was not dischargeable.
The New York Court of Appeals decision on April 5, in the Midland Insurance Company liquidation (In re Liquidation of Midland Insurance Company1) is an important affirmation of policyholder rights. In this decision, New York’s highest court held that a policyholder is entitled to a claim and policy-specific choice of law analysis in the liquidation process, rejecting the Midland liquidator’s effort to make a blanket application of New York law to Midland’s 38,000 policyholders.
According to the U.S. Bankruptcy Court for the Southern District of New York, a lack of bad faith is no longer a defense to court sanctions for failure to produce documents in a timely manner. That court, in In re A&M Florida Properties II, recently awarded sanctions against both a party and its counsel for the counsel’s failure to become familiar with the client’s email and data-retention policies and systems— despite the absence of any bad faith or willful delay.1
Article L 611-4 to L 611-15 of the French Commerce Code.
Act n° 2005-845 of 26 July 2005, as completed and amended, has created a new out-of-court settlement process known under French law as “Conciliation,” replacing the former amicable settlement or “règlement amiable.”