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.
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.
In the recent case of Mitchell v Al Jaber [2024] EWCA Civ 423, the Court of Appeal confirmed that a shareholder and director may still be subject to a fiduciary duty when purporting to transfer company property, even after the company enters liquidation. The decision was made in relation to British Virgin Island (BVI) law, but on the basis of English case authorities.
Background
Banned! Fraudsters!– Terms used by the Insolvency Service for directors who abused the government backed loan scheme which was put in place to help businesses struggling during the pandemic.
In its recent opinion in Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040, 2024 WL 339101 (5th Cir. Jan. 30, 2024), the Fifth Circuit held that a confirmed bankruptcy plan enjoined a party from asserting certain indemnification counterclaims against a plan trustee because the party did not file a proof of claim.
Background
The latest government insolvency statistics highlight that the downturn in the UK economy is still taking a significant toll and the number of UK corporate insolvencies in February 2024 remains high (and 17% higher compared to February 2023).
Latest insolvency statistics
February 2024 saw 2,102 company insolvencies, the highest February figures for at least four years.
Whether a solar system is a “fixture” sounds like a mundane legal issue – but it has significant implications for the residential solar industry and for the financing of residential solar systems. If a system is regarded as a “fixture” of the house to which it is attached, then the enforceability and priority of the finance company’s lien on the system will be subject to applicable real estate law.
Looking into the crystal ball at the start of the year to forecast future trends isn’t possible, but one common theme that we expect will continue to impact upon both directors and officers and insolvency practitioners (IP) is the increasing rise of corporate insolvencies.
If your company is named in a new lawsuit or receives a EEOC charge, part of your review process should include checking to see if the filing complainant or plaintiff has a pending bankruptcy action. If so, the next step is to see if the claimant disclosed their lawsuit or administrative complaint in his or her bankruptcy petition. If not, you may have a successful estoppel argument.
Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.
What's in a name?
A judge has found that insurers were liable to indemnify an insured despite its insurance policy specifying the incorrect name.
The case relates to 'The George in Rye' pub which was damaged by a fire in July 2019. While the named insured was “George on High Ltd t/a The George in Rye”, a separate company (George on Rye Ltd (GoR)) owned the restaurant and hotel business operating in the property.