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.

Ordinarily, a company entering liquidation is considered the commercial equivalent of “game over”, “checkmate”, “the end”, “K.O” or whatever other synonyms creditors can conjure up. This would be true for the most part because, at the end of the liquidation process, the company is usually deregistered and ceases to exist.

However, in some cases it is possible for the liquidator, a creditor or a “contributory” (member) of the company to apply to the Court for an order terminating the winding up. If made, this would return control of the company to the directors.

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

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

The statutory demand is a formidable card up a creditor’s sleeve that can result in a company being deemed to be insolvent if it does not pay the creditor’s debt within 21 days of service of the demand. Whether a statutory demand served on an incorporated body other than an Australian company will be effective largely depends on the State or Territory in which the incorporated body is based and whether it is served pursuant to the correct section of the Corporations Act 2001 (Cth) (Corporations Act).

What is a statutory demand?

Is a foreign online customer of a bankrupt goods supplier subject to personal jurisdiction in the United States, when sued by a bankruptcy trustee for fraudulent transfers? Yes, says the Bankruptcy Court for the Northern District of California in In re Fox Ortega Enterprises, Inc. Debtor. Michael Kasolas, Chapter 7 Tr., Plaintiff, v. Johnny Yau, Defendant., No. 16-40050, 2018 WL 2191597 (Bankr. N.D. Cal. May 11, 2018).

Legal and Factual Background

UK High Court Confirms Broad Definition of a “Financial Institution” – (Re Olympia Securities Commercial Plc (in administration) [2017] EWHC 2807 (Ch))

The High Court has confirmed it will adopt a broad definition of a “financial institution” for the purposes of the transferability provisions in a loan agreement including: (i) a newly incorporated company with a share capital of £1, (ii) an entity that has not traded and (iii) a special purpose vehicle established for the purpose of acquiring debt.

Facts

Two United States Bankruptcy Judges for the Southern District of New York recently issued a joint opinion addressing common issues raised by motions to dismiss in two separate adversary proceedings – one pending before Judge Bernstein and the other before Judge Glenn (the “Adversary Proceedings”). The Adversary Proceedings were filed by the debtors in two chapter 11 cases, each involving an Anguillan offshore bank – National Bank of Anguilla (Private Banking Trust) Ltd. and Caribbean Commercial Investment Bank Ltd. (the “Debtor Banks”).

Manley Toys Limited once claimed to be the seventh largest toy company in the world. Due to ongoing litigation and declining sales, it entered into a voluntary liquidation in Hong Kong. On March 22, 2016, the debtor’s appointed liquidators and foreign representatives filed a motion for recognition under chapter 15 of the Bankruptcy Code. The motion was opposed by ASI Inc., f/k/a Aviva Sports, Inc. (“Aviva”) and Toys “R” Us, Inc. (“TRU”).