One difficulty encountered by creditors and trustees in bankruptcy is the use of one or more aliases by a bankrupt. Whether it is an innocent use of a nickname or an attempt to conceal one's identity, the use of an alias can often create problems for creditors seeking to pursue debts and for trustees seeking to recover assets held by a bankrupt.

How does it happen?

A year ago, many predicted that the COVID-19 stay-at-home orders and social distancing guidelines and their impact on the economy would result in a deluge of bankruptcy filings that could rival the Great Recession of 2008-2009. However, as we approach the one-year anniversary of former President Trump declaring the SARS-CoV-2 novel coronavirus a national emergency, that prediction has not come to pass.

On January 14, 2021, the U.S. Supreme Court issued its decision in City of Chicago, Illinois v. Fulton, __ U.S. __, 2021 WL 125106 (Jan. 14, 2021), which addresses issues related to the automatic stay and a creditor’s ability to retain property of a debtor’s estate upon the commencement of a bankruptcy case. The Fulton decision is a consolidation of four similar cases where the City of Chicago impounded debtor cars pre-petition in response to unpaid traffic tickets and fines. After filing for bankruptcy, each debtor requested that the City return the respective vehicles.

Summary

Suppliers of goods often rely upon retention of title clauses to preserve their goods in the event the purchaser defaults on any aspect of the supply agreement.  However, how enforceable are these provisions when the purchaser enters into administration or liquidation or becomes bankrupt?  What steps can suppliers take to protect their interests in these circumstances?

As concerns about illegal phoenix activity continue to mount, it is worth remembering that the Corporations Act gives liquidators and provisional liquidators a powerful remedy to search and seize property or books of the company if it appears to the Court that the conduct of the liquidation is being prevented or delayed.

When a person is declared a bankrupt, certain liberties are taken away from that person. One restriction includes a prohibition against travelling overseas unless the approval has been given by the bankrupt's trustee in bankruptcy. This issue was recently considered by the Federal Court in Moltoni v Macks as Trustee of the Bankrupt Estate of Moltoni (No 2) [2020] FCA 792, which involved the Federal Court's review of the trustee's initial refusal of an application by a bankrupt, Mr Moltoni, to travel to and reside in the United Kingdom.

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, qualifying businesses may seek up to $10 million under the Paycheck Protection Program (PPP) for funding payroll and business expenses. The US Small Business Administration (SBA) guarantees the loans, and the full principal amount of the loans and any accrued interest may qualify for loan forgiveness. For many businesses, PPP loans have served as a lifeline during the COVID-19 pandemic.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act.”The legislation includes a historic $2 trillion aid package intended to stabilize the U.S. economy and provide disaster relief aid to American citizens and businesses impacted by the COVID-19 pandemic. The emergency aid package, which is by far the largest in American history, contains many provisions focused on providing relief. Among these are certain temporary amendments to Title 11 of the United States Code (the “Bankruptcy Code”).

INTRODUCTION

In times of unprecedented market uncertainty, assessing financial exposure to your counterparties is essential. Volatility in the commodities markets and a public health crisis create the perfect storm for financial distress for companies in nearly every industry. Risk is inherent in business and that risk is heightened when you are dealing with a company in financial distress. Managing these risks begins with knowing your counterparties and understanding your legal position with respect to those counterparties.