The U.S. Supreme Court decided on Monday, June 1, 2015, that Chapter 7 debtors may not rid themselves of second-mortgage liens in cases where, at the time of the bankruptcy, the first mortgage is undersecured. The decision reverses two Eleventh Circuit rulings that would have made such liens disappear under Section 506(d) of the Bankruptcy Code. 

A bankruptcy case^[1] (no surprise) has produced another instructive court ruling on post-acceleration enforceability of a prepayment (make-whole) premium provision contained in a debt instrument. This latest lesson comes via the U.S. District Court for the Southern District of New York, affirming a ruling of that district’s U.S.

ADVISORY | DISPUTES | TRANSACTIONS Financial Litigation roundup Spring 2015 Welcome to the latest edition of our Financial Litigation roundup. In this edition, we consider recent judgments and ongoing cases from the banking and financial world in the UK and Asia, as well as regulatory developments across those jurisdictions. English judgments SPL Private Finance (PF1) IC Limited and others v Arch Financial Products LLP and others; SPL Private Finance (PF2) IC Ltd and other v Robin Farrell. more> McWilliam v Norton Finance (UK) Ltd (in liquidation).

Removal of requirement for sanction

Previously under section 165 IA 86, liquidators in a voluntary winding up would have to seek sanction of the company (in members’ voluntary liquidation) or of the court or liquidation committee (in creditors’ voluntary liquidation) in order to exercise their powers to pay debts, compromise claims etc. SBEEA removes this requirement so that liquidators can exercise those powers freely. This will aid expeditious winding up of companies. Equivalent provisions have also been put into place for trustees in bankruptcy.

In an opinion issued today, the Supreme Court held that debtors do not have the right to immediately appeal a bankruptcy court’s decision denying confirmation of a proposed reorganization plan. This decision resolves a circuit split, and confirms the balance of power between debtors and creditors in the plan confirmation process. As the Supreme Court explained, “the knowledge that [a debtor] will have no guaranteed appeal from a denial should encourage the debtor to work with creditors and the trustee to develop a confirmable plan as promptly as possible.”

In April 2013, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) came into force, making the success fee applied to a Conditional Fee Arrangement (CFA), and the After the Event (ATE) insurance premiums, irrecoverable by a successful party to litigation proceedings.  However, under article 4 of LAPSO, there is an "insolvency exemption" making these costs recoverable by an insolvency practitioner.

Summary

The recent judgment of Mrs Justice Proudman in Plaza BV –v- The Law Debenture Trust Corporation¹  illustrates and extends a line of authorities in which the English courts have sought to narrow the scope of the mandatory application of Article 2 of the Brussels Regulation 44/2001.  These cases are a reaction to the broad interpretation of the applicability and effect of Article 2 set out in the ECJ's decision in Owusu –v- Jackson² , and attempt to confine the influence of that decision. 

The published judgment in Abbey Forwarding[1] will not make for comfortable reading for HMRC. Having instigated the winding up of a profitable business, which led to the dismissal of 23 employees, and accused  innocent directors of fraud, HMRC then withdrew all assessments made against the company and attempted to avoid undertakings it had given to the court when seeking the original winding up order.

Introduction

In the recent case of Re LDK Solar Co Ltd,⁽¹⁾Justice Lam considered the approach that the court should take in deciding whether to invoke its jurisdiction to approve an arrangement or compromise between a foreign company and its creditors or members.