Despite three recent landmark UK restructuring plan decisions, uncertainty remains around the value, if any, a plan company should offer dissenting creditors as the “deliverability price” of a plan.

Weil's Appellate & Strategic Counseling group welcomes you to Weil's SCOTUS Term Review. Here, we summarize and analyze the cases from the 2023 Supreme Court Term that are most germane to our clients' businesses.

Actions brought against the BHS directors by the group’s liquidators have resulted in the largest reported award for wrongful trading since the provision’s introduction, but the judgment highlights some unsettled areas of the law relating to directors’ duties.

The key distinction between a fixed and a floating charge is well established as a matter of English law.

The opening of safeguard or reorganisation proceedings does not automatically terminate a current agreement notwithstanding any contractual clause providing for termination.

Termination by a lessor

The liquidator of UKCloud Ltd (the Company) applied to the court for directions as to whether a debenture granted by the Company created a fixed or floating charge over certain internet protocol (IP) addresses. The lender argued that it had a fixed charge.

Fixed or floating?

Background

The administrators of Toogood International Transport and Agricultural Services Ltd (in administration) issued an application seeking an extension of the administration. Their application also asked the court whether consent to a previous administration extension should have been obtained from a secured creditor which had been paid in full before the extension process.

Once a creditor, always a creditor?

The German Federal Court of Justice (Bundesgerichtshof) has clarified the conditions under which incongruent collateral, granted when an insolvency is imminent, can be contested. The burden of proof is placed on the defendant creditor to demonstrate that the action was part of a serious restructuring attempt.

Background

In Harrington v. Purdue Pharma LP, in a 5-4 decision, the Supreme Court held that the Bankruptcy Code does not authorize bankruptcy courts to confirm a Chapter 11 bankruptcy plan that discharges creditors’ claims against third parties without the consent of the affected claimants. The decision rejects the bankruptcy plan of Purdue Pharma, which had released members of the Sackler family from liability for their role in the opioid crisis. Justice Gorsuch wrote the majority decision. Justice Kavanaugh dissented, joined by Chief Justice Roberts and Justices Kagan and Sotomayor.

Today, in Office of the United States Trustee v. John Q Hammons Fall 2006, LLC, the Supreme Court held that debtors who paid fees in bankruptcy cases administered by the U.S. Trustee Program are not entitled to any relief, even though the Court previously ruled that those debtors had been unconstitutionally overcharged. This decision is the culmination of several years of litigation concerning differential fee structures across judicial districts.