Liquidators are commonly appointed to a company where, prior to liquidation the company was a trustee of a trust. Often when the liquidators are appointed, the company has ceased to be the trustee and a replacement trustee has not been appointed.
In these circumstances, the company in liquidation is a bare trustee in relation to the trust assets and the liquidator will assume this role until a replacement trustee is appointed. Often a replacement trustee is not appointed.
Does the liquidator as bare trustee have a power to sell trust assets?
Secured creditors should not allow a liquidator to sell a secured asset without first:
If your terms of trade documents don’t have the correct provisions, you can lose goods supplied to a customer that becomes insolvent, even though you may have title to the goods.
A recent Supreme Court decision highlights the need for retention of title suppliers to have adequate terms of trade documents and to register security interests on the Personal Property Securities Register (PPSR) to avoid losing assets if a customer becomes insolvent.
Hopes that certain severance payments paid by companies to terminated employees could escape application of the Federal Insurance Contributions Act (FICA) tax were dashed when a unanimous U.S. Supreme Court ruled on March 25th that such payments, when not tied to state unemployment benefits, were “wages,” and thus taxable. The ruling for the government will allow the IRS to disallow protective refund claims that numerous companies filed after a federal circuit court held that termination payments were not subject to FICA tax.
On March 4, 2014, a unanimous United States Supreme Court decided Law v. Siegel1 and clarified that exercising statutory or inherent powers, a bankruptcy court may not contravene specific statutory authority. Law will likely have broad implications for business bankruptcy cases even though it directly involved the exercise of a bankruptcy judge’s authority under section 105(a) to create a pragmatic solution to the actions of a bad actor in a consumer bankruptcy case.
A recent decision of the Second Circuit Court of Appeals has added an additional eligibility requirement for the filing of Chapter 15 cases. In Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), ___ F.3d ___, 2013 WL 6482499 (2d Cir.
One of the effects of commercial globalization is that the bankruptcy filing of a debtor with transnational business relationships will sometimes result in a clash between the substantive bankruptcy laws of different countries. A frequent question is whether the bankruptcy laws of a foreign country should be brought to bear upon creditors located in the United States, even where foreign bankruptcy law is at odds with the laws of the United States.
In a decision that demonstrates the potentially broad impact of the forthcoming Supreme Court decision in Bellingham, the Fifth Circuit held that bankruptcy judges may not “determine” non-core matters even where the parties consent. BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), No. 12-51270 (5th Cir. Nov. 11, 2013), see Executive Benefits Ins. Agency v. Arkinson (In re Bellingham Ins. Agency), 702 F.3d 553 (9th Cir. 2012), cert. granted 133 S.Ct. 2880 (2013) (set for oral argument January 14, 2014).
Adding to the split of authority that has developed since the Supreme Court’s decision in Stern v. Marshall, 131 S.Ct. 2594 (2011), in Wellness Int’l Network Ltd. v. Sharif, No. 12-1349 (Aug. 21, 2013), the 7th Circuit aligned with the 6th Circuit’s decision in Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012), to hold that a party may not consent or waive objection to the limited Constitutional authority of an Article I bankruptcy court.
To deepen government reform and improve government efficiency, the State Council of the People's Republic of China recently released the Plans for Government Institutional Reform and Function Change (the Restructuring Plan), and was approved by People’s Congress at its first session and it took effect on March 14, 2013.