Belgium has modified its law on business reorganizations that involve distressed companies. The new law of January 31, 2009, on the continuity of companies came into force on April 1, 2009, replacing an unpopular and rigid law on judicial composition proceedings that dated to 1997.

This new law simplifies the rules and procedures for reorganizing distressed companies by providing a variety of new flexible out-of-court and in-court options designed to facilitate business recovery.

A pre-packaged business sale (or “pre-pack”) is an arrangement under which the sale of a company’s business or assets is agreed in principle with a buyer prior to the appointment of an insolvency practitioner (most commonly an administrator), who then executes the sale shortly after his or her appointment.

Italian Decree 134/2008, which suspended competition law for crisis buyouts, thereby allowing the merger of Alitalia and Air One, has been called into question following a claim of unconstitutionality brought by consumer association Federconsumatori, Italian airline Meridiana, its subsidiary Eurofly and the province of Milan. The question of whether the Decree potentially violates Article 3 on equal treatment and Article 41 on freedom of economic activity has now been referred to the Italian Constitutional Court.

On May 26, Lehman Brothers Holdings Inc. (LBHI) filed a motion requesting the U.S. Bankruptcy Court for the Southern District of New York to establish August 24 as the deadline for filing proofs of claim against LBHI and its affiliates, and to establish a procedure for such filing, including a required form to be completed online relating to derivatives claims, and a new proof of claim form specific to this case.

On April 16, General Growth Properties, Inc. and certain of its affiliates (“GGP”) filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York. GGP operates a national network of approximately 200 shopping centers. To the surprise of many, most of GGP’s property-specific SPE subsidiaries (“SPE Debtors”) also filed for bankruptcy.

In the matter of Bernard L Madoff Investment Securities LLC [2009] EWHC 442 (Ch), Mr Justice Lewison granted an application for the transfer of personal data in the possession of the joint provisional liquidators of a UK subsidiary to the trustee in bankruptcy of its parent company in the US, Bernard L Madoff Investment Securities LLC. The application was granted on the basis that it was necessary for reasons of substantial public interest.

After a relatively brief and checkered stint in Delaware courts, it appears that the cause of action against corporate directors for “deepening insolvency” may have lost its place in Delaware corporate jurisprudence.

Companies that terminate pension plans before filing for bankruptcy may no longer escape paying significant claims to the PBGC.

In Pension Benefit Guaranty Corporation v. Oneida, Ltd. dated April 8, 2009, the U.S. Court of Appeals for the Second Circuit reversed a ruling by the U.S. Bankruptcy Court for the Southern District of New York characterizing certain “termination premiums” owed to the Pension Benefit Guaranty Corporation (PBGC) pursuant to the Deficit Reduction Act of 2005 as contingent, pre-petition claims and thus dischargeable in bankruptcy.

The United States Bankruptcy Court for the Middle District of Pennsylvania recently found that a bankruptcy trustee could not either pierce the corporate veil of a limited liability company to reach the owners of the LLC, nor could the trustee “reverse-pierce” the corporate veil of the owners of the LLC to reach a separate restaurant business that they owned.

On March 12, West Coast Life Insurance Co. added civil conspiracy and several violations of Florida law to a complaint alleging that an investment company, several insurance brokers and individual policyholders engaged in an illegal stranger-owned life insurance (STOLI) scheme. The amended complaint alleges that Park Venture Advisors masterminded and implemented the plan, which involved the sale of individual life insurance policies to private investors, while Wells Fargo Delaware Trust Co.