As expected, the scope of directors' duties whilst a company is in financial difficulties has been the source of further consideration by the Court. The recent case of Hunt v Singh [2023] EWHC 1784 raised the question as to whether, following the Supreme Court decision in BTI 2014 LLC v Sequana SA, a director's duty to take into account the interests of creditors arises where the company is at the relevant time insolvent if a disputed liability comes to fruition.
In April, we discussed how Colorado’s state supreme court issued its highly anticipated decision confirming a borrower’s bankruptcy discharge does not accelerate secured installment debt or trigger the final statute of limitations period to recover the debt.
The U.S. Bankruptcy Court for the Southern District of Florida created a three-factor test to help determine the ownership interests of social media accounts. The court in In re Vital Pharm[1] found that (1) documented property interests, (2) control over access, and (3) use, each play a role in establishing ownership over social media accounts.
In January, the U.S. Supreme Court agreed to hear Lac du Flambeau Band of Lake Superior Chippewa Indiansv. Coughlin after the First Circuit barred the Lac du Flambeau Band from seeking to collect on a $1,600 debt obligation to the tribe’s lending arm, Lendgreen, after the debtor filed for Chapter 13 bankruptcy.
Ben Gold, partner in RPC’s professional and financial risk team, explains how a recent Supreme Court case (BTI v Sequana) confirms company directors owe a duty to creditors if the company nears balance sheet or cash flow insolvency.
This ‘creditor duty’ is of increasing significance as insolvencies rise.
Colorado just became the latest state to recognize that a borrower’s bankruptcy discharge does not accelerate secured installment debt or trigger the final statute of limitations period to recover the debt.
It is widely anticipated that the next twelve months could be a challenging period for many businesses in the UK and that there could be a significant rise in the number of companies in financial distress.
Where this is the case, the directors of those companies will need to be increasingly mindful of the duties they have to the company's creditors, as well as to its shareholders.
The Lac du Flambeau Band of Lake Superior Chippewa Indians (Lac du Flambeau Band) found support from law professors specializing in federal Indian law as well as an assemblage of tribes and Native American groups in its bid before the U.S. Supreme Court to assert sovereign immunity from suit regarding alleged violations of the automatic stay. While they acknowledge that tribal immunity may be abrogated, they insist Congress must do so expressly and unequivocally.