Under section 363 of the Bankruptcy Code, a debtor is permitted to sell substantially all of its assets outside of a plan of reorganization. Over the past two decades, courts have increasingly liberalized the standards under which 363 sales are approved. A recent decision from the United States Court of Appeals for the Third Circuit,

Most due diligence processes in a business acquisition context require a review of material contracts and, in particular, a review of any restrictions on assignment of those contracts.

When a business enters into a long term commercial contract with a customer, the identity of that particular counterparty may influence the terms of the contract. A party deemed more favourable may obtain a better price or better terms.  Unless restricted by enforceable anti-assignment provisions, these favourable contracts can be very valuable in a traditional M&A context.

Of general interest is the appeal in the case of Horton v Henry, on which we reported in our January 2015 update. In Horton, the High Court declined to follow a previous ruling, and decided that a bankrupt could not be compelled to access his pension savings to pay off creditors.

Introduction

In this Banking Reform updater we examine the single resolution mechanism (SRM), which together with the single supervisory mechanism (SSM) (Banking Reform updater 10) forms the key pillars of the EU Banking Union.

What is the SRM?

Declining to follow a 2012 decision, the High Court has ruled that a bankrupt’s unexercised rights to draw his pension did not represent income to which he was entitled within the meaning of the Insolvency Act 1986, and so did not form part of the bankruptcy estate.

Background

The process of repossession will involve complex issues of fact and law. Each one is different depending upon the jurisdiction involved, the approach of the operator and the attitude of the relevant authorities.

Information and planning

1. What is the risk if a counter-party is located in an exiting member state?

What might be the funding risk?

A member state exit is likely to result in increased liquidity problems and less available funding as financial institutions manage their exposure to the Eurozone. Businesses may find that traditional sources of finance (loans, bonds etc) are less easy to obtain or raise.

Intra group funding may also be problematic if there are intra-company loans to subsidiaries located in risk member states and those subsidiaries are having difficulty meeting their payment obligations under such loans.

The Fifth Circuit recently dealt with the interplay of bankruptcy and oil and gas liens in the case of In Re: T.S.C. Seiber Services, L.C., decided November 3, 2014.

The Supreme Court has recently declined to hear retailer Game’s appeal, ruling that there was no arguable point of law of general public importance which ought to be considered, particularly bearing in mind the case had already been the subject of judicial decision and reviewed on appeal.

“… permission to appeal be refused because the application does not raise an arguable point of law of general public importance which ought to be considered by the Supreme Court…”