The current position

In one of a number of cases in which Bedell Cristin has acted for English trustees in bankruptcy who have sought recognition in Jersey for the purposes of seeking documents from Jersey trustees in order to trace assets of the bankrupt, the court was asked to recognise the trustee, even though the petitioning creditor in the bankruptcy was a foreign revenue (HMRC), whose claim comprised 99.8% of all claims against the bankrupt. There is a long established rule in England, Jersey and elsewhere which prevents enforcement of foreign revenue claims.

Last week, the Associated Press announced that the number of bankruptcy filings in federal courts this year have increased by more than one-third. Based on numbers from the Administrative Office of the U.S. Courts, the Associated Press reports that about 1.4 million bankruptcy cases were filed between October 1, 2008 and September 30, 2009. In comparison, 1 million cases were filed during this same period last year. While Chapters 7, 12 and 13 filings have all increased, of particular note, Chapter 11 filings increased by 68 percent.

Scottish Lion Insurance Company is attempting for the second time to promote a solvent scheme of arrangement to bring its insurance business to an early close. The first attempt was abandoned in 2005 when the company was ordered by the Scottish Court to disclose to one objecting creditor a list of all its scheme creditors, whereupon the proposed scheme was withdrawn.

The United States Bankruptcy Court for the District of New Jersey denied fourteen plans of reorganization filed by Congoleum Corporation before the court finally dismissed the case on February 27, 2009. While the Congoleum bankruptcy proceedings involve numerous issues, this article focuses generally on insurer standing and specifically, on whether Congoleum’s insurers had standing to object to Congoleum’s twelfth plan of reorganization.

Background

The concept of cell companies was first introduced to Jersey in February 2006. In addition to the widely recognised principle of the protected cell company ("PCC"), a new concept of incorporated cell company ("ICC"), the first of its kind, was also implemented.

In a judgment handed down last week, the Court of Appeal upheld the decision of Mr Justice Blackburne (previously reported here) that the English courts have no jurisdiction to sanction the proposed scheme of arrangement for Lehman Brothers International Europe (LBIE) insofar as it purports to extinguish rights of beneficiaries under trusts.

Following up on our previous blog on Lord Glennie's controversial decision in the Scottish Lion solvent scheme of arrangement we can now report that last week the scheme was formally dismissed.

KWL Advertising Limited (in liquidation) ("KWL") -v- Kountouris & Kountouris, Guernsey UnreportedJudgment, 18 October 2006

Ernst & Young ("E&Y") has settled the Akai Holdings ("Akai") case with Akai’s liquidator, Borrelli Walsh. In this case, E&Y was accused of negligence for failing to avert Akai’s collapse in 2004.

E&Y had been Akai’s auditor prior to the collapse, which remains Hong Kong’s biggest ever insolvency. The terms of the settlement are confidential.

On 24 September 2009, the South China Morning Post reported that new evidence had come to light which suggested that E&Y’s staff had tampered with or faked hundreds of documents relating to its audit of Akai.