On 23 January 2024, the Court of Appeal overturned the High Court's sanction of Adler Group's (Adler) restructuring plan (the Plan) (see our alert). This much anticipated judgment provides clarity on the court's discretion to sanction a plan where there are dissenting classes of creditors.

Background

The Plan envisaged:

The debt purchaser in In re McIntosh argued that because it was enforcing a debt that was not listed correctly on the debtor’s bankruptcy schedules, it was entitled to assume the debt had not been discharged. The U.S.

Under the Absolute Priority Rule, for a Chapter 11 plan to be confirmable, claims of a higher priority must be paid in full in order for lower priority claims to receive any recovery, and all creditors must be paid in full in order for equity interest holders to retain any interest in the debtor, or receive any distribution under the plan. The Absolute Priority Rule is embodied in Section 1129(b)(2) of the Bankruptcy Code.

In a landmark decision,[1] the Delaware Court of Chancery addressed, for the first time, the precise duties that a controlling stockholder owes, and the standard of review that will apply, when a controlling stockholder takes actions to block a board of directors’ desired course of action — such as by removing directors or enacting a bylaw requiring a unanimous vote for board action

On January 2, the Consumer Financial Protection Bureau (CFPB) filed an amicus curiae brief urging the U.S. Court of Appeals for the First Circuit to reverse a district court’s decision finding that a debt collector lacked the requisite knowledge and intent to violate the Fair Debt Collection Practices Act (FDCPA) when it sent a debt-collection communication prior to any knowledge of the debtor’s bankruptcy filing.

Key points

The Bankruptcy Code’s Section 547(b) allows a trustee or debtor in possession to recover property transferred to a creditor, known as a preference action. However, the Code also provides defenses to a preference action, including the ordinary course of business defense.

The English High Court has re-affirmed its jurisdiction where a disputed petition debt arises from a contract with an exclusive jurisdiction clause (EJC) in favour of a foreign court.

Background

Background

This case involved a winding up petition presented against Bridger & Co Ltd (the Company) on 15 June 2023. The petition debt arises out of a funding agreement between the parties. The Company applied for an injunction to restrain the advertisement of the petition on various grounds. The court declined to make an injunction.

Decision

The judgment helpfully confirms the position on three issues in these types of proceedings:

In a recent landmark case, the Court of Final Appeal in Hong Kong (CFA) clarified its approach to bankruptcy proceedings where the disputed petition debt arises from a contract with an exclusive jurisdiction clause (EJC) favouring a foreign court.

Background

The bankruptcy proceedings related to a disputed debt due under a credit agreement with an EJC favouring New York. The Hong Kong Court of Appeal (CA) upheld the EJC, setting aside the bankruptcy order to allow the dispute to be determined under the agreed jurisdiction. The applicant appealed to the CFA.