Summary: The Public Administration and Constitutional Affairs Committee's findings in relation to Kids Company serve as a reminder of the risks of insolvency to large charities. The inherent weaknesses in the demand-led 'self-referral' operating model resulted in little to no reserves, and ultimately led to the trustees being required to file a petition to wind up the charity. Trustees of large charities must always be mindful of reserve levels.

You know, there’s never a dull moment when one reports on the regulatory states’ endless and so often fruitless and wrong-headed tinkering with the global economy. So now… let’s talk bail-in.

A recent decision by the U.S. Court of Appeals for the Second Circuit, In re Tribune Company Fraudulent Conveyance Litigation,¹ represents a significant victory for shareholders who may get cashed out in connection with a leveraged transaction that precedes a company bankruptcy.

SEC and FDIC Propose Dodd-Frank Broker-Dealer Resolution Rules

Two recent court decisions may affect an equity sponsor’s options when deciding whether and how to put money into - or take money out of - a portfolio company. The first may expand the scope of “inequitable conduct” that, in certain Chapter 11 settings, could lead a court to equitably subordinate a loan made by a sponsor to its portfolio company, placing the loan behind all of the company’s other debt in the payment queue. The second decision muddies the waters of precedent under the U.S. Bankruptcy Code on the issue of the avoidability of non-U.S.

BLP real estate disputes partner Roger Cohen summarises a recent court decision about whether or not a landlord had accepted a lease surrender by the way it handled “jingle mail”, a letter returning the keys, from the administrators of the insolvent tenant. Jingle mail is a tactic used by administrators. The landlord argued successfully that ,on this occasion, the tactic failed.

Finance Bill 2016 includes provisions designed to prevent taxpayers converting profits generated in a company into a capital receipt in the hands of the shareholder(s). Taxpayers may want to consider winding-up their companies or making substantial dividend distributions ahead of 6 April 2016 as a result of these measures and the changes to the taxation of dividends.

Broadly, the intention is that a capital distribution made in the winding-up of a company will be taxed as income if:

An overvalued property may now have a bigger impact on a secured creditor’s bottom-line during bankruptcy.  Splitting with the Seventh Circuit, the Fifth Circuit in Southwest Securities, FSB v.

Summary

Two recent court decisions may result in a broadening of the range of options available to an equity sponsor in respect of an insolvent portfolio company. The first decision may provide increased flexibility in structuring asset sales in certain chapter 11 settings, by utilizing escrows and other techniques to potentially avoid the need to apply asset-sale proceeds strictly in accordance with creditor priorities under the U.S. Bankruptcy Code.