On September 1, 2017, the Board of Governors of the Federal Reserve System (the Federal Reserve) adopted a rule (the Rule)1 that will require global systemically important U.S. bank holding companies (U.S. GSIBs)2 and most of their subsidiaries to amend a range of derivatives, short-term funding transactions, securities lending transactions and other qualifying financial contracts (QFCs). The required amendments will limit counterparty termination rights related to certain U.S. GSIB resolution and bankruptcy proceedings.
In a September 19, 2017 decision from the bench in the matter of Bank of Montreal v. Kappeler Masonry Corporation, et. al.1 (“Kappeler Masonry”), Madam Justice Conway of the Ontario Superior Court of Justice (Commercial List) (the “Court”) confirmed that commingling of construction project receipts in a receiver’s estate account is fatal to a Construction Lien Act (Ontario) (the “CLA”) trust claim in the face of a debtor’s bankruptcy.
On September 21, 2017, the United States Bankruptcy Court for the Southern District of Texas (the Court) held, over the objection of Ultra Petroleum Corp.
On June 26, 2017, the recast EU regulation on insolvency proceedings1 (the Recast Insolvency Regulation) came into force.
Existing Legislation
In what may prove either to be a landmark decision or a mere outliner confined to its unique facts, the Court of Appeal for Ontario (the "Court of Appeal") in Romspen Investment Corporation v. Courtice Auto Wreckers Limited, et al.1 has overturned an earlier decision and lifted the stay of proceedings against a court-appointed receiver to allow a union to proceed with a certification application and an unfair labour practice complaint against the receiver.
The new Insolvency (England and Wales) Rules 2016 (SI 2016/1024) came into force on April 6, 2017 (the 2016 Rules). The 2016 Rules replace the Insolvency Rules 1986 (SI 1986/1925) and their 28 subsequent amendments (the 1986 Rules) and represent a continuation of the Insolvency Service’s recent efforts to modernize and implement policy changes under various pieces of primary legislation.
On January 17, 2017, a divided (2-1) panel of the U.S. Court of Appeals for the Second Circuit (Second Circuit) reversed the decision of the District Court for the Southern District of New York (Southern District) in the Marblegate litigation1 (Marblegate) with respect to the interpretation of Section 316(b) of the Trust Indenture Act of 1939 (TIA).
On Tuesday, Sept. 13, the Office of the Comptroller of the Currency (OCC) published a notice of proposed rulemaking and request for public comment (the Proposed Rule) introducing a regulatory regime to govern the receivership of national banks that are not insured (uninsured banks) by the Federal Deposit Insurance Corporation (FDIC). See OCC, Receiverships for Uninsured National Banks, 81 Fed. Reg. 62,835, 62,835 (Sept. 13, 2016) (the Proposed Rule).
On June 10, 2016, the Treasury Department (Treasury) and the Internal Revenue Service (the IRS) issued final regulations on the federal income tax treatment of discharge of debt issued by disregarded entities (e.g., single member LLCs) and grantor trusts (e.g., investment trusts). Under the regulations, the exemption of cancellation of debt income of taxpayers that are insolvent or in a Title 11 case (bankruptcy) only applies if the owner of the disregarded entity or grantor trust is insolvent or is a debtor in a bankruptcy case.
On May 3, 2016, Judge Shelley Chapman issued a final ruling in the Sabine Oil and Gas bankruptcy proceedings permitting the debtor to reject gas-gathering and related agreements with two midstream companies.