In In re Spanish Peaks Holdings II, LLC, Case No. 15-35572 (9th Cir. Sept. 12, 2017), the Ninth Circuit Court of Appeals held that a bankruptcy trustee may use Section 363(f) of the Bankruptcy Code to sell real property free and clear of unexpired leases without affording the non-debtor lessees the right to retain possession of the property.

In In re Lehman Bros. Holdings Inc. 855 F.3d 459 (2d Cir. 2017), the United States Court of Appeals for the Second Circuit affirmed a district court order subordinating the claims of former Lehman Bros.

Asarco LLC v. Noranda Mining, Inc., 844 F.3d 1201 (10th Cir. 2017). In a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) contribution action, the Tenth Circuit ruled that a mining company, whose liability for a contaminated site had been resolved in a settlement agreement approved by the bankruptcy court, could still seek contribution against other potentially responsible parties (PRPs), claiming that it overpaid its fair share of cleanup costs for the site. Id. at 1208.

What is a freezing order?

The purpose of a freezing order is to preserve the defendant's assets until judgment can be enforced. It operates by granting an injunction prohibiting the defendant (or anyone on his behalf) from disposing of identified assets. Legally, it does not operate as security over the assets.

Taylor v Van Dutch Marine Holding Ltd

A Court of Appeal judgment held that a company must have a settled intention to appoint an administrator when filing a notice of intent (NOI) under paragraph 26 of Schedule B1 to the Insolvency Act 1986 (“Schedule B1”) . The court also confirmed that an NOI cannot be filed in the absence of a qualifying floating charge holder (QFCH) on which to serve the notice.

In the recent case of South Coast Construction v Iverson Road Limited [2017] EWHC 61 (TCC), South Coast Construction ("South Coast") had obtained an adjudicator’s decision against the employer, Iverson Road Limited (“Iverson Road”), in a sum approaching £900,000. Iverson Road refused to pay the award so South Coast commenced enforcement proceedings in the Technology and Construction Court (TCC).

On March 22, 2017, the Supreme Court in Czyzewski v. Jevic Holding Corp., 580 U.S. __ (2017) held that a bankruptcy court does not have the power to approve a structured dismissal of a bankruptcy case that violates the Bankruptcy Code’s priority scheme unless the affected parties consent.

Introduction

Background

In the case of Horton v Henry, the Court of Appeal has recently upheld the High Court’s decision that a Trustee in Bankruptcy cannot compel a bankrupt to draw down his pension rights where the bankrupt has not elected to do so.

The facts

While not an exhaustive list, here is a reminder of some measures you might want to think about to help mitigate the effects of insolvency on construction projects. As with all these measures (and with insolvency generally) there are a number of complicated issues to be considered, so do seek advice as necessary.

Performance security