This article considers the New South Wales Supreme Court’s decision to grant leave to proceed against non-appearing foreign defendants, which were in foreign insolvency proceedings.
There has been a significant growth of litigation in Australia where there is at least one foreign defendant. This is unsurprising given the growing number of international agreements under which the parties govern their contract under Australian law and expressly agree to Australian court jurisdiction, and the volume of global trade with Australia and foreign direct investment.
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)
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
Understanding whether a company is insolvent, and the date of insolvency, is essential for directors and accountants who advise companies, as well as liquidators and other parties bringing insolvency-based claims. In understanding these issues, the analysis may need to go beyond establishing present-day liquidity – for example, what impact do long term-debts have on a company’s solvency and how are they used to prove insolvency? Which debts are relevant to the cashflow test? Whether a company is ‘able to pay all its debts’ as and when they become ‘due and payable’?
In the latest decision of the Hong Kong court to consider the interplay between arbitration clauses and winding-up or bankruptcy petitions, on 22 May 2023, the Hon. Linda Chan J (the Judge) made a winding-up order against Simplicity & Vogue Retailing (HK) Co. Limited (the Company) and rejected the Company’s argument that the dispute over the underlying debt should be referred to arbitration.
Congress passed the operative texts without noticeable fanfare. From its enactment to today, section 363(k) has entitled a secured creditor to “credit bid” the full amount of the debt owed by a debtor in any sale of the underlying collateral pursuant to section 363(b). That this statutory bequest elicited little debate made imminent sense, for Congress had thereby codified one of secured creditors’ seemingly time-honored rights.
In my earlier posts I wrote about
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Too many fish in the pond, too many electric birds not yet in the sky
On April 24, 2023, the First Circuit’s opinion in Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin came up for oral argument before the Supreme Court. At issue in this appeal is whether this provision’s “abrogat[ion]” of sovereign immunity “as to a governmental unit,” defined to include any “other … domestic government” in section 101(27), embodies a congressional intention to revoke the sovereign immunity of a Native American tribe with sufficient and obvious clarity to be construed as such a revocation.
On April 19, 2023, the Supreme Court, in a unanimous opinion written by Justice Ketanji Brown Jackson in MOAC Mall Holdings LLC, ruled Bankruptcy Code section 363(m) to be non-jurisdictional, i.e. just a “mere restriction on the effects of a valid exercise” of judicial power “when a party successfully appeals a covered authorization.” Before MOAC, the Third, Sixth, Seventh, Ninth, Tenth and Eleventh Circuits held section 363(m) to be non-jurisdictional, but the Fifth and Second Circuits had diverged.
Reasoning