In these days of continued integration of the world economy, it is not unusual for a foreign-based business enterprise to own assets of substantial value in the United States either directly or through an affiliate. If the foreign enterprise commences an insolvency proceeding in its home country, there is substantial risk that local American creditors of the insolvent company may seek to attach these assets to satisfy their own claims to the prejudice of non-U.S. creditors.

The Sixth Circuit Court of Appeals recently affirmed the decisions of the courts below and held in an unpublished opinion that a secured lender’s credit bid at a Michigan foreclosure sale extinguished all of the Chapter 13 debtor’s indebtedness to the lender, thereby precluding the lender from executing on a prepetition foreclosure judgment obtained against the debtor in Wisconsin. State Bank of Florence v. Miller (In re Miller), 2013 WL 425342 (6th Cir. Feb. 5, 2013).

As highlighted by the 2008-2009 crisis, the insolvency of sub-suppliers raises important challenges. Automotive parts suppliers may need to find an alternative sub-supplier at short notice or may have to take over the production of certain parts themselves, which often requires a recovery of the tools that were provided to the sub-supplier. Both scenarios raise difficult legal issues.

In a recent landmark ruling, the UK Supreme Court deliberated on the question of whether an overseas defendant had to have submitted to the jurisdiction under common law before a foreign bankruptcy order would be recognised and enforced in England. Richard Keady and Jay Qin of Bird & Bird consider the practical implications of the decision and the significance it may have on practitioners going forward.

In a previous Alert that we published in July 2012 entitled “Michigan Court Authorizes Receiver Sale of Real Property Free and Clear of Redemption Rights,” we reported on a decision of a Michigan trial court in Ottawa County, Michigan permitting a state-court receiver to sell real property free and clear of a mortgagor’s redemption rights.

In a fairly controversial decision from January 2012, the United States Bankruptcy Court for the Central District of Illinois held that a financing statement must contain the “legal” name of an individual as it appears on the individual’s birth certificate. Miller v. State Bank of Arthur (In re Miller), Adv. P. No. 11-9055 (Bankr. C.D. Ill. Jan. 6, 2012). On appeal, the United States District Court for the Central District of Illinois reversed and held that the Uniform Commercial Code requires only that a “correct” name appear on the financing statement.

Indiana Code Section 32-28-3-9, often referred to as the Personal Liability Notice (PLN) Statute, provides a means for subcontractors, equipment lessors, and laborers to assert a claim against a project owner for amounts owed for labor and material on a construction project. Essentially, the PLN Statute provides a means to assert a lien against funds the owner would otherwise pay to a general contractor, as contrasted to asserting a mechanic’s lien claim against real estate.

The Indiana Court of Appeals recently held in a published opinion that the appointment of a receiver for the benefit of a mortgagee who agreed to subordinate its mortgages was mandatory under Indiana law. PNC Bank, Nat’l Assoc. v. LA Dev., Inc., __ N.W.2d __, 2012 WL 3156539 (Ind. Ct. App. Aug. 6, 2012).

Like the common law of most other states, Michigan law generally grants to a court-appointed receiver a first priority claim in the receivership proceeding for payment of the receiver’s fees and expenses incurred in that proceeding. See, e.g., In re Dissolution of Henry Smith Floral Co., 260 Mich. 299, 244 N.W. 480 (1932); Cohen v. Cohen, 125 Mich. App. 206, 335 N.W.2d 661 (1983).

The United States Bankruptcy Court for the Western District of Michigan recently held in a published opinion that no statutory or common law landlord’s lien exists under Michigan law. Rather, in order for a landlord to assert a valid lien on the personal property of its tenant, the tenant must have consensually agreed to grant a security interest in the property and the landlord must have perfected such interest in accordance with Article 9 of the Uniform Commercial Code. In re Kentwood Pharmacy, LLC, ___ B.R. ___, 2012 WL 2899383 (Bankr. W.D. Mich. July 17, 2012).