Debtors must provide known creditors with actual notice of a claims bar date if they want the bar date to apply to those creditors. Such was the holding in In re Majorca Isles Master Association, Inc., Case No. 12-19056-AJC, Dkt. No. 222 (Bankr. S.D. Fla. March 27, 2014), where the bankruptcy court stated that when both a debtor and a creditor are “guilty in the handling of a claim and the [d]ebtor is aware of the creditor’s claim, then a tie goes to the creditor[,]” and the creditor’s claim will be allowed.

Last Tuesday, Puerto Rico sold its much-ballyhooed $3.5 billion in non-investment grade general obligation bonds. Two days later, two legislators in Puerto Rico’s Senate filed a bill which, if enacted, would permit insolvency filings by Puerto Rico’s public corporations in Puerto Rico’s territorial trial court. The juxtaposition of the two events has some bond investors crying foul.

Introduction

Does the ATO have priority over secured creditors in a liquidation? Is a receiver required to account to the ATO for any tax payable out of funds received on the sale of an asset before accounting to the secured creditor? Are receivers and liquidators personally liable for the tax payable from funds received by them? Can receivers and liquidators avoid such personal liability by distributing funds received to creditors before a tax assessment arises? These issues were at the centre of a Federal Court judgment handed down on 21 February 2014.

In a recent decision by the United States Bankruptcy Court for the Southern District of New York, Weisfelner, v. Fund 1, et al. (In re Lyondell Chem. Co.), 2014 Bankr. LEXIS 159 (Bankr. S.D.N.Y.

A Delaware bankruptcy court recently limited a secured creditor’s right to credit bid an acquired claim to the purchase price of that claim. In In re Fisker Auto. Holdings, Inc., 2014 Bankr. LEXIS 230 (Bankr. D. Del. January 17, 2014), the United States Bankruptcy Court for the District of Delaware addressed a motion by Fisker Automotive, Inc. (“Fisker”) to sell substantially all of its assets (the “Sale Motion”) to Hybrid Tech Holdings, LLC (“Hybrid”).

Two days before Christmas, the Supreme Court of New South Wales delivered a bonus for the general unsecured creditors of the collapsed discount giant Retail Adventures, and confirmed the requirements for deeds of company arrangement.

Deeds of Company Arrangement

Today the High Court of Australia handed down a decision which confirms a liquidator has the green light to disclaim leasehold interests in land (Willmott Growers Group Inc v Willmott Forests Limited (receivers and managers appointed)(in liquidation)).

Due to the way in which the case came before the Courts, the High Court did not consider the application of s568B of the Corporations Act 2001 (Cth) (Act). 

This section allows tenants to challenge in Court the liquidator’s disclaimer.

In a recent decision by the influential Third Circuit Court of Appeals, In re KB Toys Inc., 2013 U.S. App. LEXIS 23083 at *17 (3d Cir. Nov. 15, 2013), the Court decided that “the cloud on the claim” stemming from a preferential payment made to the original claimant continues with the claim, which then could be disallowed.

In a recent advisory, we reported on an apparently favorable decision to secured creditors from the Fifth Circuit Court of Appeals that held that a secured creditor’s claim survives bankruptcy where the secured creditor received notice of the case and was found to have not actively participated in it.

In the world of private equity, vast sums of money are raised by private investors who pool their money into collective funds in order to acquire companies, i.e., a “portfolio company”, with the goal of eventually flipping the portfolio company at a significant profit. Sometimes, however, that bet goes wrong, and the portfolio company is sold at a loss or, worse, liquidated in bankruptcy.