Communicating with Scheme Creditors: Beware of Zealous Advocacy

A-Cap Energy Limited [2023] FCA 1356 ("A-Cap") and Symbio Holdings Limited [2024] FCA 40 ("Symbio")

The main communication with scheme creditors is the explanatory statement approved at the first court hearing.

However, there can be other communications which are proposed to be sent to creditors.

In the case of other communications which are known at the time of the first hearing, they can include:

1. Introducción

En la edición de este mes de marzo destacamos:

La Sentencia de la Audiencia Provincial de Barcelona de 20 de diciembre de 2023 que considera irrescindible la hipoteca constituida por la concursada a favor de la AEAT incluso cuando lo que se garantiza es la deuda de un tercero, y no la propia.

In early February, a Delaware bankruptcy judge set new precedent by granting a creditors’ committee derivative standing to pursue breach of fiduciary duty claims against a Delaware LLC’s members and officers. At least three prior Delaware Bankruptcy Court decisions had held that creditors were barred from pursuing such derivative claims by operation of Delaware state law, specifically under the Delaware Limited Liability Company Act (the “DLLCA”).

This Quickguide outlines some practical considerations for companies whose contractual counterparties are experiencing financial distress, including what questions may be asked of the counterparty in relation to its distress and how to negotiate payment terms or recover debts.

1. Overview

A Massachusetts Bankruptcy Court’s recent appellate decision in Blumsack v. Harrington (In re Blumsack) leaves the door open for those employed in the cannabis industry to seek bankruptcy relief where certain conditions are met.

DoCA’s: Discriminating between Creditors -Is it for a Proper Purpose

Canstruct Pty Limited v Project Sea Dragon Pty Limited (No. 4) [2024] FCA 112 ("Canstruct")

In the first restructuring plan since the Court of Appeal's landmark decision in Adler, the High Court has handed down an extraordinary judgment sanctioning McDermott's heavily contested Part 26A restructuring plan and berating the conduct of its opposing creditor. Despite this, the opposing creditor ended up with the financial compromise they asked for – not through the plan but, in part at least, because of events occurring in the parallel Dutch WHOA proceedings. This should give UK lawyers some pause for thought.

Introducción

En la edición de este mes de febrero destacamos dos interesantes sentencias de la Audiencia Provincial de Valencia:

Is an administrator of a company an "officer" of that company? The Supreme Court's answer in a recent employment judgment (with potentially broad application) was a resounding "no," which will undoubtedly reassure insolvency practitioners faced with potential criminal liability for carrying out duties conferred on an "officer" of the company.

It is a rare occasion that one can be assured with certainty that, if they file a motion with a bankruptcy court, it will be granted. But, in the Third Circuit, that is exactly what will happen if a creditor or other party in interest moves for an examiner to be appointed under Section 1104(c) of the Bankruptcy Code. Once considered to be within the discretion of a bankruptcy court “as is appropriate,” the appointment of an examiner is now guaranteed if the statutory predicates are fulfilled according to the Third Circuit Court of Appeals.