The United States Supreme Court, on June 9, 2014, unanimously held that certain “core” proceedings (e.g., fraudulent transfer suits ) could still be litigated in the bankruptcy court, but only if that court’s proposed fact findings and legal conclusions are subject to de novo review by the district court. Executive Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency), 2014 WL 2560461 (U.S. Sup. Court, June 9, 2014).

On 16 April 2014 we assisted J.K. Buckenham Limited (JKB) in successfully obtaining the court’s leave to convene a meeting of its creditors, a meeting at which JKB will ask such creditors to consider and to vote on a scheme of arrangement under the Companies Act 2006 (the Scheme). JKB is promoting the Scheme as part of a wider solution to end its broking obligations, release trapped cash, relinquish its FCA permissions, and ultimately liquidate.

THE SCHEME

The U.S. District Court for the Southern District of New York, on April 27, 2014, issued a decision directing the bankruptcy court to dismiss fraudulent transfer complaints brought by the Madoff Securities Investor Protection Act of 1970 (“SIPA”) trustee against investment funds, their customers and individuals when the trustee failed “plausibly [to] allege that defendant[s] did not act in good faith.” SIPC v. Bernard L. Madoff Inv. Sec. LLC, 2014 WL 1651952, at *5 (S.D.N.Y. April 27, 2014).

The U.S. District Court for the Western District of Washington recently construed the terms of a customary loan agreement to preclude certain hedge funds viewed as “acquir[ing] distressed debt and engag[ing] in predatory lending” from voting on a debtor’s plan of reorganization. Meridian Sunrise Village, LLC v. NB Distressed Debt Investment Fund Ltd. (In re Meridian Sunrise Village, LLC), 2014 WL 909219 (W.D. Wash. Mar. 7, 2014).

The English Cases —Further Extension of UK Scheme of Arrangement for the Benefit of Foreign Companies

The United States Court of Appeals for the Seventh Circuit, on March 19, 2014, held that a corrupt debtor’s pre-bankruptcy cash transfer to a commodity broker was a “settlement payment” made “in connection with a securities contract,” thus falling “within [Bankruptcy Code] §546(e)’s safe harbor” and insulating the transfer from the trustee’s preference claim. Grede v. FCStone, LLC (In re Sentinel Management Group, Inc.), 2014 WL 1041736, *7 (7th Cir. Mar. 19, 2014).

The U.S. Court of Appeals for the Fourth Circuit, on Feb. 21, 2014, affirmed the dismissal of a bankruptcy trustee’s fraudulent transfer complaint against a “warehouse” lender who had been paid by a distressed home mortgage originator several months prior to the originator’s bankruptcy. Gold v. First Tennessee Bank, N.A., 2014 U.S. App. LEXIS 3279 (4th Cir. Feb. 21, 2014) (2-1). Affirming the lower courts, the Fourth Circuit held that “the bank accepted the payments” from its borrower “in good faith.” Id., at *2.

American and British directors of corporations should be mindful of the different standards of conduct, obligations, and potential personal liability when holding directorships in Turkish companies, particularly if such companies’ financial situation is deteriorating.

Setoff provisions are commonly found in a variety of trading related agreements between hedge funds and their dealer counterparties. Last November, Judge Christopher Sontchi of the United States Bankruptcy Court for the District of Delaware held that “triangular setoff” is not enforceable in the context of a bankruptcy case.[1] “Triangular setoff” is a contractual right of setoff that permits one party (“Party One”) to net and set off contractual claims of Party One and its affiliated entities  against another party (“Party Two”).

We recently wrote about the highly controversial decision of the Delaware Bankruptcy Court in In re Fisker Automotive capping a secured creditor’s right to credit bid its $168 million claim at $25 million.[1] The secured creditor immediately appealed to the District Court.[2] As a procedural matter, the secured creditor had an absolute right to have its appeal heard only if the Bankruptcy Court’s ruling was considered a “final order.” If it was not a “final order,” then the District Court had discretion on whether to hear the merits of the appeal. On Feb.