I. Summary

Last month, in a significant ruling in the General Growth Properties, Inc. (“GGP”) bankruptcy case, the United States Bankruptcy Court for the Southern District of New York denied motions to dismiss, as bad faith filings, the bankruptcy cases of 20 purported bankruptcyremote special purpose entity (“SPE”) subsidiary debtors.1

Introduction

In a recent decision, the United States Bankruptcy Court for the Southern District of New York found that the Statutory Committee of Unsecured Creditors (the “Committee”) of Iridium, a failed Motorola spin-off venture, was unable to prove that Iridium was insolvent or had unreasonably small capital during the four-year period prior to commencement of its bankruptcy case.

For lawyers dealing regularly with commercial secured lending, the requirement to register company fixed and floating charges has long been fraught with tension. It is a commercial necessity for charges over a company's assets to be registered in a publicly available register. Prospective creditors need to be able to establish how far the company's assets have been secured and are available to meet its commitments. Failure to register will result in the charge being invalid against any liquidator, administrator or creditor of the company if the company becomes insolvent.