In Holliday v. Credit Suisse Securities USA LLC, United States District Court for the Southern District of New York ("SDNY") Judge George B. Daniels affirmed the dismissal of state law transfer avoidance claims related to a leveraged securities buyout transaction.
IN THE NEWS
Government lifts (in part) the temporary insolvency measures
On 9 September 2021, the government announced that the temporary restrictions introduced by the Corporate Insolvency and Governance Act 2020 (CIGA 2020) which were put in place to protect companies during the pandemic are being lifted, and will be replaced from 1 October 2021 with new temporary measures, which include the introduction of a temporary revised debt limit for presenting winding up petitions.
What have we been up to?
Aside from our collective (but not wholly unexpected) disappointment that the lifting of the remaining Covid restrictions has been pushed back to 19 July, the team continue to advise on a wide range of insolvency related matters, amongst the recent highlights being:
From 1 October 2021, those restrictions will be replaced by new measures brought about under the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10 Regulations 2021) (the “Regulations”).
Under the Regulations, which are to be temporary and due to last until 31 March 2022, a creditor will be able to present a winding up petition against a corporate debtor where:-
(i) The debt is for a liquidated amount, which has fallen due and is not an ‘excluded debt’ (see below) (Condition A)
The Government has announced that it will be bringing an end (of sorts) to the temporary restrictions surrounding a creditor’s ability to present a statutory demand and winding up petition against a corporate debtor. Those restrictions, which were introduced under the Corporate Insolvency and Governance Act 2020 in a response to the Covid 19 pandemic, have been in place since June 2020 and were set to expire on 30 September 2021.
Lenders often require their borrowers to be “special purpose entities” in real estate transactions. This is a way that lenders can mitigate their bankruptcy risk in the event that the borrower or any of its parent entities file for bankruptcy. In addition, since most real estate financing is non-recourse, lenders require that the borrower is a separate, special purpose entity so that no other property or business will impact the property which is the subject of the underlying loan.
In re Fencepost Productions Inc. that even though an assignment of voting rights provision in a subordination agreement was not enforceable in a bankruptcy proceeding, a subordinated creditor nevertheless was barred from participating in proceedings related to a chapter 11 plan and disclosure statement on the basis that the subordinated creditor lacked prudential standing.
Before we kick things off, all of the Business Support and Insolvency Team here at Boyes Turner would like to wish all of you a very Happy New Year.
A recent decision of New York’s highest court potentially strengthens the ability of lenders to bring suits against third parties for participation in a borrower’s breach of single purpose entity/bankruptcy remote loan document covenants.
A recent decision of New York’s highest court potentially strengthens the ability of lenders to bring suits against third parties for participation in a borrower’s breach of single purpose entity/bankruptcy remote loan document covenants.