Singularis Holdings Limited v PricewaterhouseCoopers [2014] UKPC 36

PricewaterhouseCoopers v Saad Investments Company Limited [2014] UKPC 35

The Privy Council gives credence to the concept of “modified universalism” (being the court’s common law power to assist foreign winding up proceedings) and notes some of the circumstances which would permit a “stranger” to a winding up order the opportunity to challenge that order.

The facts:

German insolvency law, unlike US insolvency law, only recently introduced (in 2012) the so-called protective shield proceedings (Schutzschirmverfahren) to enable potentially illiquid and/or over-indebted debtors to restructure the company on the basis of a so-called insolvency plan. Thereby, the liquidation of a company by a future insolvency administrator can be avoided.

November 10, 2014, is the deadline for filing proof of claims with the Office of the Special Deputy Receiver in Illinois regarding the estates of Lumbermens Mutual Casualty Company, American Manufacturers Mutual Insurance Company and American Motorists Insurance Company. Those insurance companies are all part of the Lumbermens Mutual Group and were formerly known as Kemper. They entered liquidation on May 10, 2013.

In its October 1, 2014 decision in Quadrant Structured Prods. Co. v. Vertin, et al., C.A. No. 6990, the Delaware Court of Chancery applied the protections afforded under the business judgment rule to investment strategies adopted by directors of insolvent corporations. The court held that the business judgment rule barred derivative claims asserted against directors by a creditor who had alleged that the company’s high-risk investment strategy was implemented for the purpose of benefitting the corporation’s controller at the creditors’ expense.

Loan agreements and bond indentures often contain "make-whole" provisions, which provide yield protection to lenders and investors in the event of a repayment prior to maturity. They accomplish this by requiring the borrower to pay a premium for pre-payment of a loan. This allows lenders to lock-in a guaranteed rate of return when they agree to provide financing. Borrowers also benefit since the yield protection allows lenders to offer lower interest rates or fees than they would absent such protection.

Again, of interest to all schemes providing defined benefits is the recent settlement in the litigation involving the Lehman Brothers Scheme, where the payment of £184 million, representing costs of the buying-out benefits, has been agreed.

Following a detailed investigation by TPR commencing in 2008, and a legal battle through the hierarchy of courts up to the Supreme Court (SC), members of the Lehman Brothers Pension Scheme will receive their full benefits after a settlement was reached on 18 August 2014.

On July 16, 2014, the Uniform Law Commission (the “Commission”) approved a series of discrete amendments to the Uniform Fraudulent Transfer Act (the “UFTA”) and renamed it the Uniform Voidable Transactions Act (the “UVTA”). The UVTA is intended to address inconsistency in the courts, better harmonize with the Bankruptcy Code and the Uniform Commercial Code (the “UCC”), and provide litigants with greater certainty in its application to a fraudulent transfer action.

Introduction

On Tuesday 10 June 2014 in the Australian Capital Territory Industrial Magistrates Court, an early mention in the Kenoss Contractors case was heard.  This case includes a prosecution of both an organisation for allegedly failing to meet the primary health and safety duty and an officer for allegedly failing to exercise due diligence under the Work Health and Safety Act 2011 (ACT) which commenced on 1 January 2012.  This case is ostensibly the first prosecution of an officer under the new harmonised WHS laws.

Lenders and their attorneys are conditioned to believe that being over-secured is as good as life gets for a creditor.  Lenders want to secure repayment with collateral that is valuable and liquid, while their attorneys ensure that the security interest is properly perfected.  But, post-closing confidence in a job well done can quickly evaporate if the borrower files a bankruptcy case intending to sell the collateral. 

A recent decision out of the U.S. District Court for the Western District of Washington will be of interest to both lenders and borrowers of loans that are expected to be traded. In Meridian Sunrise Village, LLC v.