The decision in In the matter of Independent Contractor Services (Aust) could mean more reliance upon fair entitlements guarantee funding provided by the Commonwealth in relation to the liquidation of trading trusts.

The bankruptcy court overseeing the Lehman Brothers chapter 11 cases rejected efforts by Lehman Brothers Special Financing Inc. (LBSF) to recover roughly $1 billion in payments made to numerous noteholder defendants from the liquidation of collateral originally pledged to secure both obligations under notes issued by special purpose entities and credit default swap (CDS) obligations to LBSF, holding that the termination of the swap and liquidation and distribution of the collateral were protected by the Bankruptcy Code’s safe harbor.

Key Points:

This case provides some clarification of matters relating to registration of retention of title clauses for secured creditors dealing with grantors

The registration of security interests on the Personal Property Securities Register (PPSR) is a critical, yet unresolved, issue in the context of the appointment of administrators and liquidators, and also for parties to sale transactions.

Key Points:

While shareholders may only need to establish indirect market causation, there are still significant obstacles for establishing shareholder claims.

Do plaintiffs in a shareholder class action have to show they relied upon misleading or deceptive conduct, or is it enough that the market in general relied upon them, which then affected the share price?

The Board of Governors of the Federal Reserve System proposed a rule that would require US global systemically important banking institutions to amend their contracts for certain common financial transactions to preclude the immediate termination of such contracts if a firm enters bankruptcy or a resolution process. Relevant contracts – termed “qualified financial contracts” – that would have to be amended include those used for derivatives, securities lending and short time financing such as repurchase agreements.

The Australian Government is proposing to constrain certain "ipso facto" clauses ‒ a move which could make flip clauses void. The closing date for submissions is Friday 27 May 2016.

How would changes to ipso facto clauses affect securitisation?

Key Points:

Although they should always keep time-frames very much in mind, the decision in BKA Practice Co Pty Ltd gives liquidators greater scope to find all possible time-frames in which they have to work.

On April 6, the Federal Deposit Insurance Corporation (FDIC) rescinded Financial Institution Letter (FIL) 50-2009 entitled “Enhanced Supervisory Procedures for Newly Insured FDIC-Supervised Depository Institutions.” The FIL, among other measures, had extended the de novo period for newly organized, state nonmember institutions from three to seven years for examinations, capital maintenance and other requirements.

Key Points:

Companies that have leasing as a small and irregular part of their overall business still must comply with the PPSA if their interests in leased goods are to be protected.

The financial pressure on the oil and gas industry is well known. Dozens of oil and gas companies have defaulted on credit facilities or filed bankruptcy recently and industry observers expect many more to follow.