In Bankruptcy Code Section 363 sales of assets, there are winners and losers.
Chapter 11 is known as a forum for reorganizing or selling a financially distressed business. If a Chapter 11 reorganization is not possible, a sale of assets may create investment opportunities for strategic buyers, investment banks, and private equity to take advantage of the “distress” normally associated with Chapter 11 to acquire assets at a discount, exemplifying Warren Buffet’s “value” buying.
Legal & Regulatory
BRRD: FCA publishes modification by consent for Article 55 rules
Picture the scene: You have just received word that your customer has filed Chapter 11. You had followed my ad-vice (see article Reducing a Customer’s Accounts Receiva-ble in the Zone of Insolvency), and put the customer on a cash-before-delivery basis and demanded assurances of performance. You were successful in reducing the ac-counts receivable owed, and avoiding preference liability in doing so.
The customer, now a Chapter 11 debtor, calls and de-mands that you continue to ship, and resume credit terms.
Second Circuit holds that Bankruptcy Code preempts creditors’ state law constructive fraud claims.
The change provides clarity regarding the pledges over credit rights, restoring pledges as effective and efficient security interests.
Material changes to the Italian bankruptcy law will likely result in increased interest of investors in the distressed market.
The Italian legislators passed significant amendments to the legal framework applicable to debt restructurings and bankruptcy proceedings with law decree No. 82/2015, subsequently converted, with amendments, in law No. 192/2015 (Law 192).
Latham & Watkins operates worldwide as a limited liability partnership organized under the laws of the State of Delaware (USA) with affiliated limited liability partnerships conducting the practice in the United Kingdom, France, Italy and Singapore and as affiliated partnerships conducting the practice in Hong Kong and Japan. The Law Office of Salman M. Al-Sudairi is Latham & Watkins associated office in the Kingdom of Saudi Arabia. In Qatar, Latham & Watkins LLP is licensed by the Qatar Financial Centre Authority.
Latham & Watkins operates worldwide as a limited liability partnership organized under the laws of the State of Delaware (USA) with affiliated limited liability partnerships conducting the practice in the United Kingdom, France, Italy and Singapore and as affiliated partnerships conducting the practice in Hong Kong and Japan. The Law Office of Salman M. Al-Sudairi is Latham & Watkins associated office in the Kingdom of Saudi Arabia. In Qatar, Latham & Watkins LLP is licensed by the Qatar Financial Centre Authority.
The 10th U.S. Circuit Court of Appeals issued an important preference decision on August 10, 2015.
What You Need to Know
Payments to creditors arising from a recent, single business transaction can be protected by the ordinary course of business defense.
C.W. Mining Company Case
The debtor C.W. Mining Company was failing. In an attempt to survive, it decided to try something new, specifically to increase coal production by converting its mining operations from continuous mining to a long wall system.
Setoff is commonly encountered in bankruptcy and non-bankruptcy situations. If there are mutual debts between two entities, either may generally offset the debts. These debts frequently arise where one entity is a vendor to a customer and selling on credit, and at the same time is also making occasional purchases on credit from the customer. If one entity owes $100 to a second entity but is owed $300 by this second entity, these mutual debts may be offset, leaving just the $200 owed by the second entity.