On May 5, 2020, Judge Mary Walrath of the United States Bankruptcy Court for the District of Delaware delivered a bench ruling that denied a minority shareholder’s motion to dismiss the Chapter 11 cases of Pace Industries and certain of its affiliates on the grounds that the shareholder’s contractual right to block a bankruptcy filing under the debtor’s certificate of incorporation was contrary to public policy.

The ongoing COVID-19 pandemic has raised pressing questions about how a force majeure provision in a lease will affect a tenant's obligation to pay rent.

The existing jurisdictional conflict¹ between US bankruptcy courts under the Federal Bankruptcy Code and the Federal Energy Regulatory Commission (FERC) regarding required approvals for a debtor in bankruptcy to reject an executory Federal Power Act (FPA)-jurisdictional agreement has also been asserted by FERC with respect to Natural Gas Act (NGA)-jurisdictiona

In Houston, oil is king. But this year, several energy titans are among a troubling and growing corporate list turning to bankruptcy protection. Even if the economy rebounds unexpectedly, experts expect the sharp increase in bankruptcy proceedings to continue, at least for the remainder of 2020.

Bankruptcy Boom Creates E-Discovery Issues

Secured lenders are troubled at the recent news that a New York state court judge denied a preliminary injunction request filed in the Supreme Court of New York by a group of dissenting first-lien lenders, seeking to prevent a borrower, Serta Simmons, and certain first-lien consenting lenders from entering into a recapitalization transaction. In exchange for the purchase of the consenting lenders’ debt at a discount, the consenting lenders received new super-priority debt ranking ahead of the non-consenting lenders’ debt.

InIn re Juarez, 603 B.R. 610 (9th Cir. BAP 2019), the Bankruptcy Appellate Panel of the U.S. Court of Appeals for the Ninth Circuit addressed a question of first impression in the circuit with respect to property that is exempt from creditor reach: it adopted the view that, under the "new value exception" to the "absolute priority rule," an individual Chapter 11 debtor intending to retain such property need not make a "new value" contribution covering the value of the exemption.

Background

As discussed in earlier posts,¹ substantial uncertainty exists over whether companies in bankruptcy are eligible to pursue funding pursuant to the SBA’s Paycheck Protection Program, or PPP, which was established by the CARES Act to support small businesses by offering SBA-guaranteed loans on advantageous terms.

The Corporate Insolvency and Governance Bill (“Bill”) published on 20 May 2020 proposes to introduce a number of significant reforms to UK restructuring and insolvency law . The scope of the Bill is wide ranging and includes measures to protect companies in financial difficulty as a result of the current pandemic. Several of the provisions contained in the Bill will have particular impact on the landlord and tenant relationship during the current COVID-19 crisis, which is the focus of this article.

Temporary prohibition against petitions on the basis of statutory demands

The new Corporate Insolvency and Governance Bill will introduce new provisions to protect a company from suppliers wishing to terminate supply contracts or invoking more draconian terms when the company is entering into certain insolvency procedures, a CVA, or a new restructuring plan or moratorium (as introduced by the Bill), (each an “Insolvency Procedure”).

The purpose behind the new provisions is to maximise the possibility of a company being rescued or being able to sell its business as a going concern by helping it to trade through an Insolvency Procedure.

The landlord argued that the force majeure clause did not apply at all for three primary reasons. The Bankruptcy Court rejected each of the landlord’s arguments.