In two recent decisions, the United States Bankruptcy Court for the Southern District of New York has interpreted narrowly certain of the Bankruptcy Code’s safe harbor provisions.  

Following the Court of Appeal decision in their application to the Court for directions to enable them to identify client money and its traceable proceeds (as previously reported here), the administrators of Lehman Brothers International (Europe) sought further directions regarding the further work to be carried out, the evidence to be prepared and the identification of appropriate respondents and sought a protective costs order.

The English High court has approved a scheme of arrangement for a company incorporated in Germany which had its centre of main interests in Germany, no establishment in the UK and no assets in the UK likely to be affected by the scheme.

This case is one of a number of recent cases where restructurings of foreign companies have been effected by English schemes of arrangement. The court set out its reasoning in this case in some detail in view of the possibility that the European Court of Justice would consider some of the relevant issues in a forthcoming appeal in another case.

On April 25, 2011, the Rhode Island Superior Court (Silverstein, J.) ruled in favor of the constitutionality of the Voluntary Restructuring of Solvent Insurers Act (the “Restructuring Act”), a state statute enacted in 2002 that allows Rhode Island domestic commercial insurers and reinsurers (including those that redomesticate to Rhode Island) to enter into a commutation plan for their run-off business.

Introduction

In BNY Corporate Trustee Services Limited v Eurosail–UK 2007–3BL Plc and others, the Court of Appeal ruled on the interpretation of the so-called "balance-sheet" test of insolvency under section 123(2) of the Insolvency Act 1986. This is essentially that a company is deemed unable to pay its debts if the value of its assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities. This appears to be the first reported case on the interpretation of the balance-sheet test of insolvency.

On February 16, 2011, the United States Court of Appeals for the Third Circuit ruled that a discounted cash flow analysis constituted “a commercially reasonable determinant[] of value” for purposes of section 562(a) of the United States Bankruptcy Code.1 In so doing, the court upheld the United States Bankruptcy Court for the District of Delaware decision sustaining the objection of American Home Mortgage Holdings, Inc.

The United States Bankruptcy Court for the District of Delaware recently dismissed equitable subordination and fraudulent transfer claims filed by the Official Committee of Unsecured Creditors of Champion Enterprises, Inc. ("Champion") against more than 100 prepetition lenders to Champion (collectively, the "Defendants")1.

The administrator who is running off the business of English (re)insurer GLOBAL General & Reinsurance Company Ltd filed a petition under Chapter 15 of the United States Bankruptcy Code with the federal bankruptcy court in Manhattan yesterday. The petition asks for the court's assistance with the last of four Schemes of Arrangement for GLOBAL, which was sanctioned by the High Court of Justice for England & Wales on January 28, 2011.

As we reported earlier in the week, the Federal Deposit Insurance Corporation ("FDIC") has begun filing lawsuits against the directors and officers of banks that it now holds in receivership . The lawsuits are consistent with previous public statements in which the FDIC committed to try to recover, from the directors and officers of these failed banks, some of the $2.5 billion lost to bad loans in recent years.