A recent court ruling by U.S. Bankruptcy Judge Burton Lifland clarifies the process for determining how much money investors may be entitled to receive in connection with the Securities Investor Protection Corporation (SIPC) proceeding involving the Madoff Ponzi scheme. The new ruling specifically related to whether investors could receive amounts equaling the totals appearing on their last account statements. The judge sided with the SIPC-appointed trustee, Irving Picard, who argued that investors could claim only the amount they first invested with Madoff (minus any withdrawals).

Beneficiaries of a Ponzi scheme who were subsequently found liable to cheated investors under state securities laws could not discharge this liability under Chapter 7 of the Bankruptcy Code, the U.S. District Court for the Western District of Oklahoma ruled.

The PPF policy statement can be found here

Following its November 2009 consultation, the PPF has published a statement confirming its policy on measuring insolvency risk for the 2011/12 levy. Schemes and employers should act quickly before the 30 and 31 March 2010 deadlines.

The policy statement confirms that for the 2011/12 levy year, the PPF will adopt new policies, including:

The U.S. Bankruptcy Court for the Southern District of Texas issued a stern warning to professional services providers regarding “tail fees,” establishing a presumption of unreasonableness against contract terms requiring fees not attached to tangible, identifiable and material benefits to the debtor’s estate.

On January 25, Judge Peck of the U.S. Bankruptcy Court for the Southern District of New York entered a declaratory judgment in favor of Lehman Brothers Special Financing Inc. (LBSF) in a case examining a collateralized debt obligation (CDO) transaction and concerning the effect of event of default provisions on the payment priorities of LBSF as swap counterparty under certain swap agreements and the holders of certain credit-linked synthetic portfolio notes. The payment waterfalls (Priority Provisions) of most CDO transactions give priority to swap counterparties over noteholders.

In parallel with the decision to allow the UK government to intervene in the liquidation of Bradford & Bingley, the European Commission has approved measures taken to facilitate the restructuring of Dunfermline Building Society. After the business encountered major financial difficulties, the UK Government intervened to facilitate an approved restructuring plan under which the building society’s impaired assets were split from its profitable business and put into administration.

Summary and implications

The court has clarified that administrators must pay rent as an expense of the administration when they use property.

The High Court has recently held* that:

Summary and implications

Two recent cases involving company administrations have seen the court take very different approaches to an administrator’s demands. The court has shown that it will look at the overall purpose of the administration before deciding whether to allow administrators to use their powers. Clients should consider:

Summary and implications

Whilst the property market remains challenging, the possibility of landlords entering into administration increases and many redevelopment schemes have been put on hold.

The Commodity Futures Trading Commission is proposing to amend its Bankruptcy Rules to permit the trustee for a bankrupt futures commission merchant to continue to operate the business of the commodity broker in the ordinary course for a limited period of time.