The Personal Insolvency Bill has now passed through the Dail and will commence in the Seanad. The Minister for Justice has commented that the intention is still to have the Bill enacted by Christmas.
After failed court-ordered mediation, Hostess Brands, Inc. – makers of iconic bakery goods that include Twinkies, Ding Dongs, Ho Hos and Wonder Bread – received permission from a bankruptcy court to cease operations and liquidate last week.
So, what does the impending liquidation of Hostess have to do with employee benefits? Well, one of the largest issues facing Hostess has been crippling union pension contributions, which have been reported as high as $1 billion.
On 4 July 2012, the Minister for Finance, Mr Michael Noonan, launched a public consultation on the tax implications of appointing a receiver. The consultation paper was jointly issued by the Department of Finance and the Revenue Commissioners and invited input by 4 September 2012 from interested parties in relation to technical and practical tax implications concerning the appointment of receivers.
The Personal Insolvency Bill 2012 has passed Committee Stage in the Dáil. The Select Committee on Justice, Defence and Equality made a number of changes to the Bill, many of these being technical changes to clarify provisions or to correct inconsistencies.
Key changes
Some of the key changes made by the Select Committee were as follows:
The Irish telecommunications company eircom recently successfully concluded its restructuring through the Irish examinership process. This examinership is both the largest in terms of the overall quantum of debt that was restructured and also the largest successful restructuring through examinership in Ireland to date. The speed with which the restructuring of this strategically important company was concluded was due in large part to the degree of pre-negotiation between the company and its lenders before the process commenced.
Trademark licensees won a victory on July 9, 2012, when the Court of Appeals for the Seventh Circuit issued its decision in Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC. The opinion holds that the rights of a trademark licensee do not automatically terminate when its license agreement is rejected by a trademark owner in bankruptcy. Nevertheless, the significance of that victory will only become clarified if and when other courts, including possibly the Supreme Court, and Congress address the issues raised in Sunbeam.
The much anticipated Personal Insolvency Bill has been published and introduces wide-ranging measures to seek to deal with the issue of personal debt affecting many people in the country today. The headline changes are the reduction of the period a person is bankrupt from 12 to 3 years and the introduction of three new debt resolution processes which, while being under the jurisdiction of the Courts are predominantly non judicial based processes involving the newly established Insolvency Service.
Whether post-death creditor protection is available to inherited IRAs under the 2005 Bankruptcy Act has been the subject of a number of cases decided in the last several years. The argument made by bankruptcy trustees is that, on the death of the IRA owner, the IRA ceases to be “retirement funds” as it is not the retirement funds of the beneficiary. Consequently, the bankruptcy trustees argue that the inherited IRA ceases to have the protection afforded to IRAs under the Bankruptcy Code.
On 30 March 2012, the European Commission published a consultation on the future of European insolvency law.
The cornerstone of European insolvency law is Regulation (EC) No 1346/2000, known as the Insolvency Regulation. The Insolvency Regulation has been in force since 31 May 2002 and applies whenever a debtor has assets or creditors in more than one member state. It sets out provisions in relation to jurisdiction, recognition, applicable law and the coordination of insolvency proceedings opened in several member states.
The absolute priority rule of Section 1129(b) of the Bankruptcy Code is a fundamental creditor protection in a Chapter 11 bankruptcy case. In general terms, the rule provides that if a class of unsecured creditors rejects a debtor’s reorganization plan and is not paid in full, junior creditors and equity interestholders may not receive or retain any property under the plan. The rule thus implements the general state-law principle that creditors are entitled to payment before shareholders, unless creditors agree to a different result.