Clients often raise questions concerning the enforceability of arbitration clauses in bankruptcy proceedings. While this topic has been hotly debated for many years, a recent Ninth Circuit opinion, In re Thorpe Insulation Co., 671 F.3d 1011 (9th Cir. 2012), reminds us that arbitration clauses are not sacrosanct and can be struck down by the court.

Leading the Past Week

FOS upholds two Keydata complaints against IFAs but concludes that compensation should only be paid in one

The Financial Ombudsman Service ("FOS") has provisionally upheld two complaints made by Mr W and Mr and Mrs K against IFAs who recommended that they invest in the Keydata Bonds in 2005. FOS found that the products presented a greater risk than the investors were willing to take. Interestingly, however, compensation has only been offered to Mr and Mrs K.

In Blight v Brewster [2012] EWHC 165 (Ch) the High Court allowed a creditor to enforce his judgment debt against a debtor's pension funds. The court followed a 2011 Privy Council case (Tasarruf Mevduati Sinorta Fonu v Merrill Lynch Bank and Trust Company & ors) in holding that it had jurisdiction to do so under section 37 of the Senior Courts Act 1981. Section 37 provides that the court may appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.

There have been rumours in the pensions industry for a while that the Bonas case was not in fact the first contribution notice (CN) case to be decided by the Regulator's Determination Panel (Panel).  In March 2012 these rumours proved to be true when the embargo in the case of the Desmond Pension Scheme was lifted and details were published for the first time.  This speedbrief considers the Panel's determination to impose contribution notices on two individuals (Mr Desmond and Mr Gordon) and the Upper Tribunal's decision on various preliminary iss

It has long been understood by buyers of assets of distressed companies that once a sale is authorized pursuant to Section 363 of the Bankruptcy Code, the buyer is absolved of any liabilities which may have encumbered the assets of the previous owner, including causes of actions against them. However, a recent decision from the influential United States District Court for the Southern District of New York saddles buyers with the burden of unknown potential future claims.

The Court of Appeal has recently published its decision in the case of Woodcock v Cumbria PCT. This case has attracted a significant amount of attention in the media as the case looks at the extent to which employers can rely on cost considerations to justify discrimination. Although the case does not break new ground, it does show that economic factors can be taken into consideration by employers in some cases.

Background

In the matter of Lehman Brothers International (Europe) (In Administration) and in the matter of the Insolvency Act 1986 [2012] UKSC 6 On appeal from [2010] EWCA Civ 917  

Summary

Commercial Agreements -v- Commercial Reality: Supreme Court further develops principles of contractual interpretation?

Rainy Sky S.A. and others v Kookmin Bank [2011] UKSC 50

Summary

In a significant expansion of the potential risk for distressed claims traders, the Delaware bankruptcy court has recently ruled¹ that traders who engage in insider trading may have their claims subordinated to equity, and that traders who amass claims sufficient to block a plan of reorganization owe fiduciary duties to all other creditors and shareholders during plan negotiations.