Although the Australian voluntary administration regime served as the model for the UK administration system, one notable difference has emerged between the two systems: pre-packs.
Pre-packs – the use of a statutory insolvency regime to implement a pre-agreed debt / corporate restructuring – have not really taken off in Australia. In the UK, of course, they form a significant proportion of all administrations.
The statutory exemption can be refreshed each time a person signs a new contract, even if he/she continues to hold the same position.
Receivers of a failed company have been unable to convince the Federal Court that statutory restrictions on termination payments reduced the payout entitlement of a senior executive (White v Norman; In the Matter of Forest Enterprises Australia Limited (Receivers and Managers Appointed) (in Administration) [2012] FCA 33).
Background
Australia needs to rein in ipso facto clauses in order to develop a turnaround culture for financially troubled companies.
Within hours of Kodak's move into Chapter 11 bankruptcy, the internet was alive with bad jokes:
"Kodak's business didn't develop the way they expected."
"Kodak was overexposed to the GFC."
"Kodak's Chapter 11 hearing was held in camera."
Australian businesses and liquidators might be forgiven for thinking that the bigger joke is Australia's lack of a Chapter 11 turnaround culture.
Many experienced business people are now familiar with the process by which their valid and successful debt collection efforts result in liability under the preference provisions of the Bankruptcy Code.
New amendments to Federal Rule of Bankruptcy Procedure 2019 were recently adopted in an attempt to clarify requirements surrounding file 2019 statements in Chapter 11 bankruptcy cases.
Prior to the amendments, which were adopted Dec. 1, 2011, Rule 2019 was often applied in an inconsistent haphazard manner resulting in a great deal of uncertainty regarding who was required to file the statement and under what circumstances that statement was required to be filed.
The Original Rule 2019
If you are a creditor of a Delaware limited liability company and wish to pursue derivative claims on behalf of an insolvent company against the company’s present or former managers based on breaches of fiduciary duties, you may be out of luck. The Delaware Supreme Court recently decided in CML V LLC v. Bax, 2011 Del. LEXIS 480 (Sept. 2, 2011), that creditors’ rights against limited liability companies differ from those against corporations.
We write to provide an important update concerning Executive Life Insurance Company of New York (“ELNY”).
The UK Supreme Court, which is the UK's highest court, has handed down its long-awaited decision in Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc [2011] UKSC 38, in which the Court considered the validity and enforceability of so-called "flip" clauses under English bankruptcy law.
Recently secured parties, including some indenture trustees, have found the priority, scope, validity and enforceability of seemingly properly perfected security interests in Federal Communications Commission (“FCC”) licenses, authorizations and permits, and any proceeds or value derived therefrom, challenged by creditors in bankruptcy proceedings.
Imagine a scenario in which you have a long standing relationship with an important customer and you learn that this customer is running into financial difficulties. In the current economic cycle, this is probably not a hypothetical, but, rather, an everyday reality. During the course of the relationship, this important customer has from time to time fallen behind in paying invoices and has even reached or exceeded the credit limits your company has imposed on this customer.