On June 27, 2024, the United States Supreme Court issued its decision in Harrington v. Purdue Pharma LP, addressing the question of whether a company can use bankruptcy to resolve the liability of non-debtor third parties. The Supreme Court, in a 5-4 decision, held that the bankruptcy code does not authorize a release and an injunction that, as part of a plan of reorganization under Chapter 11, effectively seek to discharge the claims against a nondebtor without the consent of the affected claimants.
On June 27, 2024, the Supreme Court issued its opinion in Harrington v. Purdue Pharma L.P., 603 U.S. ____ (2024) holding that the Bankruptcy Code does not allow for the inclusion of non-consensual third-party releases in chapter 11 plans. This decision settles a long-standing circuit split on the propriety of such releases and clarifies that a plan may not provide for the release of claims against non-debtors without the consent of the claimants.
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
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.
In its recent German Pellets decision, the Fifth Circuit held that a creditor could not assert its indemnification defenses in a suit brought by the trustee of a liquidation trust because the Chapter 11 plan’s express language permanently enjoined the defenses and the creditor chose not to participate in the debtor’s bankruptcy despite having actual knowledge of it.
The High Court in Singapore has ordered the winding up of Hodlnaut Pte Ltd, a Singapore based cryptocurrency lending and borrowing platform, as it was cash flow insolvent given that the cryptocurrency funds held by the company from various creditors count as ‘debts’ within the meaning of s125(1)(e) of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA).
The United States Supreme Court recently accepted review of In re Kaiser Gypsum Co., Inc., 60 F.4th 73 (4th Cir.
Assume that you have a company which has ceased trading and is left with a cash balance. You could extract most of the cash by paying a dividend, but that would be inefficient for tax purposes (resulting in tax rates of up to 39.35%). So, instead, you decide to wind the company up and receive the proceeds as a capital distribution, taking advantage of the lower capital gains tax rates (generally at 10% or 20% depending on the circumstances). Surely that is legitimate?
As a director of a company, the regulatory landscape in England and Wales can feel like a scary place. The possible ways a director can become exposed can feel endless – especially if one asks Google.
Just ask any corporate lawyer fortunate enough to own the tome that is the Companies Act 2006. In the absence of becoming a legal expert, what can directors practically do to best protect themselves when carrying out their role?
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.