Happy birthday, Aubrey Drake Graham. Most people know Mr. Graham strictly by his middle name. The Canadian rapper Drake has carved out a hugely successful career for himself. He sells lots and lots of records – or whatever it is that they sell in the music business these days. Surprise: Drake’s music isn’t exactly our thing. We still play the Beatles more than anything else, we sing along with Crosby, Stills, & Nash in the car, and we have difficulty naming songs post-dating Nirvana.

R&I Alert

Restructuring & Insolvency News

October 2018, Issue 3

In This Issue:

• What happens to committee claims when a

case is converted from a chapter 11 case to

a chapter 7 case? 1

• Equitable mootness: alive and well in the

third circuit 1

• Buyer beware: anti-assignment clauses

enforceable under delaware law 2

• Bankruptcy court finds substantive consolidation

of non-debtors not an available remedy in

seventh circuit 3

• A creditor is allowed to be “selfish” when

Obtaining a favourable arbitration award often proves to be only half of the battle. Facing obstructive counterparties refusing to honour awards, often based in jurisdictions where enforcement is slow, difficult and uncertain, is a source of regular frustration to those pursuing claims in arbitration. That is why anyone involved in international trade should be familiar with the variety of measures available to enforce their awards.

The American economy is increasingly dependent upon the importation of merchandise, both raw materials and finished goods. Many of these imported goods are subject to duties imposed by U.S. Customs and Border Protection (“Customs”), known as “ordinary duties.” In some situations, supplemental duties such as antidumping and countervailing duties, and now the new duties on aluminum and steel imposed by Executive Order, are also assessed.

Former world number one and three-time Wimbledon champion Boris Becker, who was declared bankrupt by an order dated 21 June 2017, is claiming diplomatic immunity against ongoing bankruptcy proceedings in the High Court. Mr Becker claims his role as sports attaché to the Central African Republic (CAR) makes him immune from further actions against his assets over debts owed to private bank Arbuthnot Latham and other creditors.

These are just a few of the big high street names which have sought to compromise their obligations to creditors in recent months via a company voluntary arrangement (CVA).

CVAs are designed as a flexible method by which companies can seek to contractually alter their position regarding different creditors – each CVA will be different, but it is typical, for example, for unsecured trade creditors to be treated differently to landlords. It’s worth noting that secured creditors are not bound by a CVA, unless they agree to this.

A new wave of CVAs?

A company voluntary arrangement (CVA) is, provided the voting thresholds are met, a binding agreement made between a company and its creditors, designed to compromise a company’s obligations to its creditors.

As retailers and restaurateurs across the UK continue to show signs of financial distress, interest in the use of CVAs has increased. A common facet of a CVA is a focus on reducing rents and offloading unprofitable leases.

Compromised or full rent?

Het voorontwerp Wet homologatie onderhands akkoord ter voorkoming van faillissement moet het een in financieel zwaar weer verkerende onderneming mogelijk maken om buiten faillissement of surseance haar schulden te saneren door een akkoord op te leggen aan alle schuldeisers. Een faillissement kan hiermee worden voorkomen. De rechten van schuldeisers en aandeelhouders kunnen hierbij worden gewijzigd.

Introduction

On 17 November 2017, the Supreme Court confirmed the existing case law that if employees are entitled to payment in cash for unused leave due to the bankruptcy of their employer, such claims are considered to be estate debts, regardless of when the entitlement to such leave accrued (ECLI:NL:HR:2017:2907). This ruling was given as a response to a request for a preliminary ruling by the Leiden Subdistrict Court.

On 24 November 2017, the Dutch Supreme Court ruled that in the event a suspension of payments is converted into a bankruptcy, interest that accrues after the suspension of payments was granted, but before the debtor was declared bankrupt, can be presented to the bankruptcy trustee for verification (HR 24 November 2017, ECLI:NL:HR:2017:2991).