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.

The Business Support and Insolvency Team at Boyes Turner acted for the joint liquidators who made a successful application for their retrospective appointment as liquidators of a company.

The case

It is sometimes the case that a person who owes you money dies before they have repaid the same to you. In this article, we explore what happens to the debt and the options available to creditors who are faced with a deceased debtor.

What happens to debt after death?

The deceased’s liability to repay a debt does not cease upon his or her death. Instead, liability for the same transfers to the deceased’s estate, providing that their estate is not insolvent.

What happens to debt if the estate is insolvent

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 .

The recent rise in company insolvencies has been driven by a high number of creditors’ voluntary liquidations (CVL). The outlook for the rest of 2023 is that there will be an even higher number of companies entering a formal insolvency process in almost every sector and industry.

A high proportion of these insolvencies are small businesses (SME’s), some of which had managed to keep going with the help of Government-led support packages and bounce back loans, but with rising interest rates and inflation, they are now struggling to repay loans and obtain financing.

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).

It is now two years since the 30 April 2021 introduction of the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (the "Regulations") and a good time to look back at whether the Regulations have achieved their purpose, what issues remain and what the next two years might look like.

Summary

Key Points

Not all residential tenancies will be in the name of an individual. Sometimes it will be a company looking to take out the tenancy in their own name. Generally, this will be for the use of the one of the directors and their family. Often these sorts of agreements are seen as beneficial to many landlords who are under the impression that the company will be prompt with payment and ultimately good for the money. Whilst this can certainly be the case, it does not always work out this way.