Part 2: Amendments Affecting Mortgage Lenders and Landlords

As discussed in a previous post, the Consolidated Appropriations Act of 2021 (the “Act”), which was enacted on December 27, 2020 in response to the economic distress caused by the COVID-19 pandemic, amended numerous provisions of the Bankruptcy Code. This post discusses amendments specifically affecting landlords.

On December 27, 2020, in response to the economic distress caused by the COVID-19 pandemic and to supplement the CARES Act enacted in March 2020, the Consolidated Appropriations Act of 2021 (the “Act”) was enacted. In addition to providing $900 billion in pandemic relief, the Act benefits both debtors and creditors by temporarily modifying the following sections of the Bankruptcy Code, which may be of particular interest to creditors:

2020 was a crippling year for the aviation industry. With daily cash burn running into the tens of millions of dollars for many airlines, access to liquidity has been critical as treasury teams and fleet managers juggle expenses with decimated revenue. Many governments pledged state aid but what has been delivered to date has simply not been enough.

The ‘Golden Goose’

If a creditor is holding property of a party that files bankruptcy, is it “exercising control over” such property (and violating the automatic stay) by refusing the debtor’s turnover demands? According to the Supreme Court, the answer is no – instead, the stay under Section 362(a)(3) of the Bankruptcy Code only applies to affirmative acts that disturb the status quo as of the filing date. In other words, the mere retention of property of a debtor after the filing of a bankruptcy case does not violate the automatic stay.

In the recent judgment of the ECSC in the matter of Sumner Group Mining Limited v Zica S.A (BVIHC (Com) 2020/0171, Walkers successfully represented the respondent in defending an application to set aside a statutory demand. Jack J provided helpful guidance on the legal principles in circumstances where it is alleged that a statutory demand had been served improperly for a collateral purpose.

The applicant sought to set aside a statutory demand on the basis of either:

The Grand Court of the Cayman Islands (the "Court") recently handed down a decision in the case of BDO Cayman Ltd. and BDO Trinity Ltd. v Ardent Harmony Fund Inc. (In Official Liquidation). This case provides helpful guidance on the exercise of the Court's discretion to grant leave to commence proceedings against a company in liquidation.

Background

Practical Effects Of Significant Reforms To Guernsey’s Insolvency Law With reference to practical examples from England & Wales, this briefing note seeks to highlight three areas of change that will be of particular interest to Insolvency Practitioners, directors involved with Guernsey companies and their professional advisors once the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020 (the “Ordinance”) comes into force. Enhanced Investigatory Powers The Ordinance extends insolvency professionals’ powers in four important respects.

On December 1, 2020, certain amendments to the Federal Rules of Bankruptcy Procedure take effect. The amendments largely modify rules governing bankruptcy appeals, but also impact Rules 2002 and 2004. The changes are as follows:

In a recent decision of the Grand Court of the Cayman Islands (the “Grand Court”) in the matter of Sun Cheong Creative Development Holdings Limited (FSD 160 of 2020), the Chief Justice considered the principles applicable to the appointment of “soft touch” provisional liquidators to effect the restructuring of a Hong Kong-listed Cayman Islands company where two competing winding up petitions were filed before the High Court of Hong Kong (the ("HK Petitions" and the “HK Court” respectively).

On 29 September 2020, Chief Justice Smellie QC handed down his judgment in the Matter of Premier Assurance Group SPC Ltd (in Controllership) (FSD Cause No. 210 of 2020) confirming the powers of the controllers appointed under section 24(2)(h) of the Insurance Law, 2010 (the "Insurance Law") so as to enable them to exercise their powers as against the "world at large". In doing so, the Chief Justice held that the Court has an inherent jurisdiction to supplement section 24 of the Insurance Law to "fill the practical gap" left by that provision.

Background