The Western Australian Court of Appeal has ruled that giving security to a Bank does not destroy mutuality for the purposes of statutory set-off if the security allows the debtor to use assets to pay its debts in the ordinary course of business.

Background Facts

In line with measures announced in the 2018 Federal Budget, the government has released a package of proposed insolvency reforms: Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2018, Insolvency Practice Rules (Corporations) Amendment (Restricting Related Creditor Voting Rights) Rules 2018 and accompanying explanatory material, for consultation. Consultation concludes on 27 September.

The Patent Office's decision in McCann as Liquidator of ACN 137 233 919 v Molnar [2017] APO 30 explores interesting territory for liquidators and insolvency professionals – the intersection of insolvency and intellectual property.

On 2 October 2015, a company which had gone into liquidation, Sax, filed a request to amend the ownership of a patent application from itself to its sole director, Ms Molnar, pursuant to a sale agreement by which Sax had sold all of its intellectual property to Ms Molnar for $55,000. The Patent Office recorded the amendment on 16 October 2015.

The Bankruptcy Court for the District of Delaware recently held in In re Woodbridge Group of Companies, LLC that while Rule 3001 of the Bankruptcy Code provides a mechanism for transfers of claims, Rule 3001 is not a substantive provision allowing claims trading for notes with legally valid anti-assignment provisions.

Background

The recent decision of the London Commercial Court in PJSC Tatneft v Gennady Bogolyubov & Ors [2018] EWHC 1314 (Comm) highlights the importance that the Court will attach to full asset disclosure by a respondent to ensure the effectiveness of a freezing order, even in circumstances where the value of a respondent’s assets exceeds the sum frozen by the order.

Freezing Orders: What Are They?

In the recent decision in Carlos Sevilleja Garcia v Marex Financial Limited,1 the Court of Appeal helpfully summarised the justifications for the English law rule against claims for reflective loss and confirmed that the rule applies equally to unsecured creditors of a company as it does to shareholders.

Highlights

The Ninth Circuit reversed and remanded an Oregon bankruptcy court’s order designating recently acquired claims of a secured creditor for bad faith, holding that a bad faith finding requires “something more.” Specifically, the Court found that a bankruptcy court may not designate claims for bad faith simply because (1) a creditor offers to purchase only a subset of available claims in order to block a plan of reorganization, and/or (2) blocking the plan will adversely impact the remaining creditors.Pacific Western Bank, et al. v.

Some of the most far-reaching Australian insolvency law changes are taking effect. These new laws will restrict the enforceability of a whole class of common clauses in contracts –so called 'ipso facto' clauses.

In this edition of FINSights, we explore what these changes mean for financiers, and outline key tips and issues they should consider as we move forward into the new regime.

What are ipso facto clauses?

Are Trademark Licenses Protected in Bankruptcy? The Confusion Continues

Recently, the United States Bankruptcy Court for the District of Connecticut held that while a bankrupt licensor may reject a trademark licensing agreement, the trademark licensee may elect to retain its rights to the debtor’s trademark. The Bankruptcy Court noted that its ruling disagrees with a contrary decision issued by the First Circuit only a few months earlier.

Executory Contracts and the IP Exception