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.

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.

The Court of Appeal (CICA) has provided further clarification and guidance to Cayman Islands insolvency professionals on issues ranging from voidable transactions, the scope of liquidators’ powers and legal professional privilege, following the publication this month of a number of decisions that had come before the Court during the November 2016 Court sitting. Set out below is a summary of the Court’s findings in 3 of the CICA decisions which may be relevant to your day to day practice.

Voidable Transactions

In this thoroughly new and groundbreaking case it was held that where a creditor has already filed a winding up petition in respect of a company: (1) not only may the directors of the company parry by themselves applying for the appointment of JPLs; but (2) they may do so even without a shareholder resolution or express provision to do so in the company’s articles of association.

The last decade has exposed the bankruptcy courts across the globe to a large volume of international work, and with that experience in mind, the Judicial Insolvency Network (JIN) held its inaugural meeting in Singapore in late 2016. Its intent was to formulate a set of guidelines (theGuidelines) that would promote cooperation between Courts. Sitting alongside common law and legislative cross-border provisions, the Guidelines are a practical code to enhance some of the most successful cross-border initiatives of recent years.

In an era of increasing complexity in regulation globally, the BVI has carefully built a simple and clear regulatory framework that minimises the legal risk for lenders and financial markets participants dealing with BVI companies.

Legal

The BVI’s regulatory framework is structured to make the legal risk of lending or selling financial assets to a BVI entity lower than almost any other jurisdiction.

In a recent decision in the case of TIPP Investments PCC v. Chagala Group Ltd. et al (BVIHCM 102/2016), Mr Justice Davis-White clarified the issue of the standing of beneficial shareholders that we highlighted in our previous article.

Section 97 of Bermuda’s Companies Act 1981 imposes a statutory duty on every director to: (a) act honestly and in good faith with a view to the best interests of the company; and (b) exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances. The test is therefore an objective one using the reasonably prudent person as a comparator (see Focus Insurance Co Ltd v Hardy [1992] Bda LR 25 which appears to suggest that an element of subjectivity may also be considered in Bermuda.

In a recent November 17, 2016 opinion, Delaware Trust Co. v. Energy Future Intermediate Holding Company LLC, Case No. 16-1351, the Third Circuit Court of Appeals reversed two lower court opinions by holding that make-whole premiums can be enforceable even if the debt was automatically accelerated by a voluntary bankruptcy filing.