While a recent federal bankruptcy court ruling provides some clarity as to how midstream gathering agreements may be treated in Chapter 11 cases involving oil and gas exploration and production companies (“E&Ps”), there are still many questions that remain. This Alert analyzes and answers 10 important questions raised by the In re Sabine Oil & Gas Corporation decision of March 8, 2016.[1]

The Supreme Court of Appeal (SCA) in Lagoon Beach Hotel v Lehane (235/2015) [2015] ZA SCA 2010 (21 December 2015) recently considered the granting of a preservation order to a foreign trustee and the recognition of a foreign trustee by our courts in exceptional circumstances.

One thing we have learnt from the hit series ‘Murder She Wrote’, other than the fact that the star of the show Angela Lansbury never aged during its 12 years of airing, is that it is often the one closest to us that does the most harm.

The restructuring of financially distressed companies is on the increase globally. In line with this international trend is Chapter 6 of the Companies Act, No 71 of 2008 (Act) which introduced business rescue into the South African corporate landscape.

Although business rescue has brought a much needed and long overdue alternative to liquidation for businesses in distress, it is also responsible for many points of contention. The most pertinent of these is currently the general moratorium found in s133 of the Act.

The release provisions in a corporate debtor’s Chapter 11 plan were “not sufficiently specific to release” a plaintiff’s Fair Labor Standards Act (“FLSA”) claim against the debtor’s president (“P”), held the U.S. Court of Appeals for the Fifth Circuit on Jan. 6, 2016. Hernandez v. Larry Miller Roofing, Inc., 2016 WL 67217, at *4 (5th Cir. Jan. 6, 2016).

“A creditor does not become an insider simply by receiving a claim from a statutory insider,” held a split panel of the U.S. Court of Appeals for the Ninth Circuit on Feb. 8, 2016. In re The Village at Lakeridge, LLC, 2016 WL 494592, at *1 (9th Cir. Feb. 8, 2016) (2-1). According to the court, “Insiders are either statutory [per se] [e.g., officers, directors] or non-statutory [de facto].” Id.

A Chapter 11 debtor’s impairment in its reorganization plan of two unsecured claims filed by its former lawyer and accountant “was transparently an artifice to circumvent the purposes of” the Bankruptcy Code (“Code”), held the U.S. Court of Appeals for the Sixth Circuit on Jan. 27, 2016. In re Village Green I G.P., 2016 WL 325163, at *2 (6th Cir. Jan. 27, 2016).

A federal “secured tax claim takes priority over [a professional’s] claim to fees” in an aborted Chapter 11 case, held the U.S. Court of Appeals for the Fourth Circuit on Jan. 26, 2016. In re Anderson, 2016 WL 308590, at *1 (4th Cir. Jan. 26, 2016).

A “bank [making a secured rescue loan] had information that should have created the requisite suspicion … to conduct a diligent search for possible dirt” — i.e., whether the debtor had the right to pledge $312 million of customer securities, held the U.S. Court of Appeals for the Seventh Circuit on Jan. 8, 2016.In re Sentinel Management Group, Inc., 2016 WL 98601, at *2 (7th Cir. Jan. 8, 2016) [“Sentinel V”]. The Seventh Circuit reversed the district court, voided the defendant bank’s lien as a fraudulent transfer, and rejected the bank’s good faith defense.

A secured lender had to “pay the [encumbered] Property’s maintenance expenses incurred while the [bankruptcy] trustee was trying to sell the Property,” held the U.S. Court of Appeals for the Fifth Circuit on Dec. 29, 2015. In re Domistyle, Inc., 2015 WL 9487732, at *1 (5th Cir. Dec. 29, 2015).