Brazos Electric Power Cooperative recently filed for Chapter 11 relief in the U.S. Bankruptcy Court for the Southern District of Texas, weeks after the February ice storm severely disrupted Texas’s electricity supply and prices. Brazos filed for bankruptcy in part to shield its member cooperatives and consumers from liability for invoices totaling over $2.1 billion from the Electric Reliability Council of Texas.

According to the Guinness Book of Records, one Mr Johnson George of India holds the world record for the most roles played by any actor in one film. He played 45 roles, including Gandhi, Leonardo Da Vinci and Jesus. Company directors don’t have quite as many roles, nor are they as lofty.

On Oct. 27, 2020, Judge Marvin Isgur for the U.S. Bankruptcy Court for the Southern District of Texas held that (1) a make-whole premium was not interest or unmatured interest and thus not subject to disallowance, (2) a make-whole claim was enforceable as liquidated damages under New York law and (3) the solvent debtor exception survived the enactment of the Bankruptcy Code and the Noteholders were entitled to postpetition interest at the contractual default rate.

”The Supreme Court has today handed down its judgment in R (on the application of KBR, Inc) (Appellant) v Director of the Serious Fraud Office (Respondent) [2021] UKSC 2, an important decision relating to the Serious Fraud Office’s powers to issue notices on foreign companies under section 2(3) of the Criminal Justice Act 1987. In this article, David Savage, Head of Financial Crime looks at the case, and what the ruling means for the SFO’s investigative powers.

Summary

The bankruptcy trustee of a bank holding company was not entitled to a consolidated corporate tax refund when a bank subsidiary had incurred losses generating the refund, held the U.S. Court of Appeals for the Tenth Circuit on May 26, 2020. Rodriguez v. FDIC (In re United Western Bancorp, Inc.), 2020 WL 2702425(10th Cir May 26, 2020). On remand from the U.S. Supreme Court, the Tenth Circuit, as directed, applied "Colorado law to resolve" the question of "who owns the federal tax refund." Id., at 2.

A lender’s state law tort claims against “non-debtor third-parties for tortious interference with a contract” were “not preempted” by “federal bankruptcy law,” held the New York Court of Appeals on Nov. 24, 2020. Sutton 58 Associates LLC v. Pilevsky, 2020 WL 6875979, *1 (N.Y. Ct. Appeals, Nov. 24, 2020) (4-3). In a split opinion, the Court of Appeals reversed the Appellate Division’s dismissal of a lender’s complaint against the debtors’ non-debtor insiders. The lender will still have to prove its case at trial.

The Asserted Claims

The Court of Appeal has handed down judgment on two appeals to decide whether the appellants had standing to challenge the conduct of a trustee in bankruptcy (“the Bankruptcy Appeal”) and joint liquidators (“the Liquidation Appeal”) respectively (Brake and others v Lowes and others [2020] EWCA Civ 1491). In this article, Tim Symes, a partner in our Insolvency and Commercial Litigation teams, examines the Court of Appeal’s decision.

Secured lenders across the UK are unhappy with the government’s decision to push through a new law which could partly or fully wipe out their security in favour of HMRC debts in a liquidation or administration. In this article,  Tim Symes, a partner in our Insolvency and Commercial Litigation teams, considers the return of HMRC’s Crown preference.

The government has published draft regulations designed to tighten up how administration sales to connected parties will work. The hope is that this will increase creditor confidence and improve transparency in the process.

So, what are pre-pack administrations, what is wrong with them, and what is the government going to do about it?

What are pre-pack administrations?

A pre-pack administration is simply a ‘teed up’ sale of a company’s business and assets before it enters administration, which is completed immediately after administration.

New regulations deriving from the Corporate Insolvency and Governance Act 2020 have extended the effective prohibition on statutory demands and winding up petitions until 31 December 2020. Tim Symes, a partner in our Insolvency and Commercial Litigation teams, looks at the implications of this for debtors and creditors.