An important decision by Judge Kevin Carey of the United States Bankruptcy Court for the District of Delaware recently focused the distressed debt market (and financial creditors in general) on the proper legal characterization of a common financing provision — the “make-whole premium.”1 Judge Carey allowed a lender’s claim in bankruptcy for the full amount of a large make-whole premium, after denying a motion by the Unsecured Creditors’ Committee to disallow the claim.
WHY DOES THIS DECISION MATTER?
The U.S. bankruptcy claims trading market has grown in recent years, from one with a few specialized firms investing in small vendor trade claims into a multibillion dollar industry. Major investment banks and hedge funds now regularly buy and sell claims arising from a variety of transactions, including swap terminations, litigation judgments, debt issuances and rejected real estate and equipment leases. With individual claim amounts frequently in the millions (and sometimes billions) of dollars, the volume of claims bought and sold has increased significantly.
In the wake of the Eurozone crisis, harmonisation of European insolvency law has been firmly on the political agenda. In December last year, the European Commission proposed amendments to the European Insolvency Regulation (EIR). The UK has until 10 April 2013 to decide whether to opt in. Luci Mitchell-Fry and Sarah Lawson consider the proposed amendments of most interest to banks and other lenders.
Include schemes of arrangement (Schemes)?
The Supreme Court of Canada overturned the Ontario Court of Appeal today in what is one of the most highly-anticipated cases for the pension and insolvency bars pending before the courts. In Indalex (Re) 2013 SCC 6, the court provided clarity regarding some key questions relating to the governance of an employer-administered pension plan during a proceeding under the Companies’ Creditors Arrangement Act (CCAA). The judges split on some of the issues, but here is our brief round-up:
Introduction
Receivership and OSC proceeding
Production by court-appointed receivers
Not the right forum
Comment
Sultani Decrees
Sultani Decree No. 2/2013
Establishes the National Defence College and issues its by-laws.
Promulgated on 8 January 2013 Effective from day following publication
Sultani Decree No. 3/2013
Establishes the Public Authority for Civil Defence and Emergency Services.
Promulgated on 8 January 2013 Effective from day following publication
Sultani Decree No. 4/2013
Introduction
The Government has fed back on the responses to DBIS’s consultation on the effect of bankruptcy on the ability to access a basic bank account. Responses to the consultation have shown that only 27% of people subject to a bankruptcy order are able to retain their bank account. A bank's decision not to offer a bank account to a bankrupt is mainly based on the bankrupt's credit record, rather than on the risk of the trustee making a claim against the bank, a risk that the consultation process has shown is more perceived than real.
The Illinois legislature has passed and sent to the Governor an amendment to the Illinois Conveyances Act to address the decision in Crane v. The Gifford State Bank (2012 WL 669595 (Bkrtcy.C.D. Il). The Crane decision was rendered on February 29, 2012, and held that a mortgage could be avoided by a trustee in bankruptcy because it failed to include the interest rate and maturity date of the indebtedness secured by the mortgage.
Ministerial Decisions
Ministry of Manpower
Decision No. 611/2012
Dissolves the trade union of the employees of Sojex Oman due to its failure to appoint sufficient members for the General Assembly.
Promulgated on 10 November 2012 Effective on promulgation
Ministry of Manpower
Decision No. 612/2012
Dissolves the trade union of the employees of Gulf Air due to its liquidation.