The U.S. Court of Appeals for the Seventh Circuit recently upheld a trial court’s rejection of a borrower’s allegations that a mortgagee and its servicer violated the federal Fair Credit Reporting Act and the federal Fair Debt Collection Practices Act by allegedly inaccurately reporting her loan as delinquent following the borrower’s successful completion of her bankruptcy plan, allegedly rejecting her subsequent monthly payments, and filing a foreclosure action based on the supposed post-bankruptcy defaults.

On June 27, the U.S. Supreme Court announced a 5-4 decision rejecting the nonconsensual releases of the Sackler family in the Purdue Pharma bankruptcy case. The split is an interesting alignment of Justices: Gorsuch writing the majority opinion, joined by Thomas, Alito, Barrett and Jackson; Kavanaugh for the dissent, joined by Roberts, Sotomayor and Kagan.

The U.S. Court of Appeals for the Eleventh Circuit recently held that the anti-modification provision in the federal Bankruptcy Code applies to loans secured by mixed-use real properties, such as the large parcel at issue here which functioned both for commercial use and as the debtor’s principal residence.

A copy of the opinion in Lee v. U.S. Bank National Association is available at: Link to Opinion.

Chapter 11 bankruptcy has long been thought of as anathema to commercial real estate (CRE) lenders. This is due to the debtor-friendly bankruptcy forum, particularly with respect to (i) the up to 18 month exclusivity period during which only the debtor could propose a plan of reorganization and (ii) threats of a "cram-down" plan used to lever concessions from lenders. These provisions can be, and often were, abused by debtors with no real rehabilitative intent using bankruptcy only as a leverage tool.

A look back at bankruptcy trends and litigation in 2023 reveals a spike in bankruptcy filings driven by economic factors and fallout from the pandemic while in upper courts several interesting cases were decided involving proofs of claim, stay violations, and discharge issues.

On 30 November the Supreme Court delivered its written judgment dealing with the correct test for insolvency when considering the eligibility of a debtor for a Personal Insolvency Arrangement (PIA) under the Personal Insolvency Act 2012 (as amended).

Background

One of the qualifying criteria for a PIA is that the debtor must demonstrate that the debtor is “insolvent” within the meaning of section 2(1) of the Personal Insolvency Act 2012. That provision defines the term as meaning “that the debtor is unable to pay his or her debts in full as they fall due”.

The U.S. Court of Appeals for the Eighth Circuit recently affirmed the dismissal of several conversion claims brought by the estate of a deceased account holder against a bank, holding that one of the conversion claims was time-barred, and that the estate did not have standing to pursue the remaining conversion claims as the alleged injury was not fairly traceable to the bank.

A copy of the opinion in Muff v. Wells Fargo Bank NA is available at: Link to Opinion.

Executive Summary

In a radical departure from settled case law, the English High Court has eroded the protections of English law creditors guaranteed by the Rule in Gibbs¹ .

Executive Summary

Investors in LMA-based intercreditor agreements¹ (ICA) should be reassured by the commercial approach recently taken by the High Court in construing the "Distressed Disposal" provisions (DD Provisions).

While the economy continues to look positive on paper, the underlying issues stemming from recent inflation and ever increasing overheads continue to affect businesses. Against this backdrop and a year on from the commencement of the European Union (Preventive Restructuring) Regulations 2022 (SI 380/2022) (“the 2022 Regulations”) on 29 July 2022, it seems auspicious to remind directors of their duties to wind up a company in a timely manner or simply exercise good corporate governance and wind up companies that are no longer operational.