In brief

A selection of newly announced legislation and court decisions reinterpreting private law.

Contents

In brief

A selection of newly announced legislation and court decisions reinterpreting private law.

Draft law on preventive restructuring

The Kemper/Lumbermens saga

To refresh everyone’s recollection, this is a report from Business Insurance from March 14, 2010:

One of the benefits the US Bankruptcy Code offers debtors is the ability to assign freely contracts under which the debtor has ongoing performance obligations, even if the underlying contract contains a restriction or prohibition against such assignment. Section 365 of the Bankruptcy Code has its limits and does impose certain conditions to such assignment, such as the curing of defaults under the contract (other than so-called “ipso facto” defaults) and the requirement that the assignee be capable of future performance under the contract.

Summary of Purdue Pharma, L.P. v, City of Grand Prairie (In re Purdue Pharma, L.P.), No. 22–110 – Bk (2d Cir. May 30, 2023)

On June 27, 2023, the Official Committee of Unsecured Creditors (the “Committee”) in the BlockFi Chapter 11 bankruptcy reorganization case filed an Objection to the company’s Plan and essentially requested that the company be liquidated. The Official Committee is made up largely of 600,000 individual customers of BlockFi.

BlockFi is a wealth management and trading firm for cryptocurrency holders that first commenced operations in 2017. In July 2021, we wrote about BlockFi’s bumpy road to going public, even though its valuation had just hit $5 billion.

If at first you don’t succeed, try (and maybe try) again.

Basic Facts: Nomenclature and Numbers

When a previously reorganized debtor files a second chapter 11 case, courts and commentators refer to that continued entity’s second reorganization as a “chapter 22.” When a third case follows a second, “chapter 33” is a favored colloquialism; when a fourth, “chapter 44” is the name of choice. In practice, however, industry figures often denominate any repeat bankruptcy as a “chapter 22.”

In two cases in as many months, the Supreme Court tackled the application of sovereign immunity in two separate insolvency statutes. Two separate government-like entities suffered conflicting fates while the Court (arguably) employed the same analysis. How so?

Clear Statement Rule

In brief

In Avanti Communications Ltd [2023] EWHC 940 (Ch), the English court revisited the vexed issue of fixed and floating charges. Notably, it is the first significant case since the landmark decision in Re Spectrum Plus Ltd [2005] UKHL 41 to do so.

The distinction between fixed and floating charges is economically important and affects the recoveries a secured creditor may expect to receive in an insolvent liquidation of the security provider.