Insolvency is a common issue in the construction industry. While newspaper headlines frequently focus on the top ten to 15 large contractor insolvencies, this is not reflective of how insolvency impacts the industry as a whole.

In all construction projects, there is a long tail of smaller contractors that are adversely impacted by an insolvency event that occurs further up the chain. As a result, when parts of the supply chain fall apart, the tremors can be felt by large sections of the industry.

The European Parliament's proposal of 28 March 2019 for a Directive of the European Parliament on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and restructuring proceedings (hereinafter, the "Directive") aims at developing national preventive restructuring frameworks.

The court noted that the DOJ might prosecute cannabis-related businesses under the CSA, notwithstanding plan confirmation. Thus, Garvin may have foreclosed any future DOJ CSA-based noneconomic objections to cannabis reorganizations.

Contrary to the Bankruptcy Court’s ruling, the District Court concluded that California's liquidated damages statute does not apply to the default interest rate provision.

This is a favorable decision for commercial secured lenders. Although the ruling is not controlling on other bankruptcy courts as it is a trial court level ruling, courts may certainly consider it when presented with similar issues.

In In re 1111 Myrtle Avenue Group, LLC (Bankr. S.D.N.Y. 2019), a New York bankruptcy court held that a default interest rate provision of 7 percent was enforceable and not a penalty against a debtor, which retained significant equity postbankruptcy.

Background

The Pension Protection Fund has published updated general guidance on insolvency and the assessment period. This guidance is intended to help Insolvency Practitioners (IPs) to understand what they should do if a DB scheme employer suffers an insolvency event and their role and responsibilities during an assessment period.

Key points and actions for IPs

The guidance confirms a number of key points, including:

The Revel decision provides a cautionary tale for purchasers under Section 363.

In re Altadena Lincoln Crossing LLC, 2018 Westlaw 3244502 (Bankr. C.D. Cal.), a California bankruptcy court held that a default interest rate provision was an unenforceable penalty under applicable California law because, among other things, the applicable loan agreements did not contain an estimate of the probable costs to the lender resulting from the debtor’s default.

Background

In a matter of first impression, the U.S. Bankruptcy Court for the Northern District of New York recently analyzed whether a debtor may exempt from her bankruptcy estate a retirement account that was bequeathed to her upon the death of her parent. In In re Todd, 585 B.R. 297 (Bankr. N.D.N.Y 2018), the court addressed an objection to a debtor’s claim of exemption in an inherited retirement account, and held that the property was not exempt under New York and federal law.

In Kaye v. Blue Bell Creameries (In re BFW Liquidation), 899 F.3d 1178 (11th Cir. 2018), the U.S. Court of Appeals for the Eleventh Circuit found that a liability for an allegedly preferential transfer may be reduced by the amount of new value given, regardless of whether that new value has already been repaid by the debtor before its bankruptcy filing.