On 11 June 2024, Mr. Justice Leech handed down a landmark UK judgment relating to wrongful trading and misfeasance against the former directors of the BHS Group of companies (BHS) pursuant to the Insolvency Act 1986 (IA86).
The 533-page judgment saw one of the largest reported wrongful trading awards since the introduction of IA86, as well as a novel claim for “misfeasant trading.”
On June 6, 2024, the Supreme Court issued its opinion in Truck Insurance Exchange v. Kaiser Gypsum Co., No. 22-1079, conferring broad standing to debtors’ pre-bankruptcy liability insurers to appear and be heard in Chapter 11 bankruptcy proceedings. The ruling eliminates the “insurance neutrality” doctrine that previously constrained the participation of insurers in Chapter 11, greatly expanding insurers’ capacity to influence the reorganization process.
Background: Insurer Standing in Chapter 11 Bankruptcy
On 4 March 2024, Mr Justice Richards of the English High Court delivered a judgment (the Judgment) in relation to the sanction of the restructuring plan under Part 26A of the Companies Act 2006 (the Plan) of Project Lietzenburger Straße HoldCo S.à r.l. (the Plan Company). The Judgment required that a new creditors’ meeting of the Plan Company’s senior creditors be convened to vote on an amended Plan.
To modernise the restructuring toolkit available to special administrators, the UK government has introduced changes to the English special administration regime (SAR)1 for distressed water companies. The changes follow reports of significant stress in the water services sector.
New Changes
Over the past few years, the senior living sector has endured some hard times. In 2023, many operators found themselves in distress and facing a sale or court-governed proceeding. Interest rates, wage inflation, staffing shortages and patient volume decline post-pandemic all impact operational risk and investment opportunities.
- Globalization of Businesses Leads to More Cross Border Restructurings – With the increase in international businesses’ globalization comes an increase in cross border restructurings both inside and outside of courts.
Go-To Guide:
Over the past few months, Delaware courts have continued to address important M&A and corporate issues. Significant corporate law developments have also arisen from state and federal courts in California. Below are some highlights and practical takeaways related to important developments in Delaware law.
CORPORATE
Advance Notice Bylaws and Board Action Affecting the Stockholder Franchise.
In a recent decision, Bruce v. Citigroup, Inc., et al., the United States Court of Appeals for the Second Circuit clarified the limits of bankruptcy court jurisdiction over class actions. Specifically, the court rejected a bankruptcy court’s ruling that allowed a plaintiff’s nationwide class action to survive Defendant Citibank, N.A.’s (“Citi”) motion to dismiss and strike class allegations.
On June 15, 2023, the U.S. Supreme Court ruled that the Bankruptcy Code barred an Indian tribe’s attempts to collect on a defaulted debt from a Chapter 13 debtor.