In Quadrant Structured Products Company, Ltd. v. Vertin (October 1, 2014), Vice Chancellor Laster clarified the Delaware Chancery Court’s approach to breach of fiduciary duty derivative actions brought by creditors against the directors of an insolvent corporation.

On September 26, 2014, the United States Court of Appeals for the Second Circuit, overturning decisions by the Bankruptcy Court and the District Court for the Southern District of New York, held that the Bankruptcy Court was required to review under section 363 of the Bankruptcy Code the transfer of a claim by a chapter 15 debtor with a recognized foreign main proceeding pending in the British Virgin Islands (the “BVI”).1     In a case under chapter 15 of the Bankruptcy Code in which a foreign main proceeding has been recognized, section 1520(a)(2) of the Bankr

Key Points:

There are three things prudent insolvency practitioners can do when left with non-company assets.

A not too infrequent issue for insolvency practitioners: what can you do with unclaimed assets of third parties? Clayton Utz recently acted for the receivers and managers of Arcabi Pty Ltd (In Liquidation) (Receivers and Managers Appointed) (known as “The Rare Coin Company”) and developed a strategy to deal with the issue.

Background

Key Points:

Courts will limit an administrator's liability where proposed funding is to be used directly to advance an agenda consistent with the objects of Part 5.3A of the Corporations Act.

A recent decision of the NSW Supreme Court highlights the flexibility of Part 5.3A of the Corporations Act and the ability of administrators to seek orders protecting their interests and facilitating restructures, and was the first stage of what promises to be a novel and challenging administration (In the matter of Nexus Energy Ltd [2014] NSWSC 1041).

On August 26, 2014, the Honorable Robert D. Drain, Bankruptcy Judge of the United States Bankruptcy Court for the Southern District of New York, issued several bench rulings (the “Bench Rulings”) in connection with confirmation of a plan of reorganization in the chapter 11 cases of MPM Silicones, LLC, et al.

Key Points:

This case presented a difficult and unique set of circumstances for the court to navigate while the scheme clock was ticking.

The recent approval of the David Jones scheme of arrangement demonstrates how, in the absence of shareholder opposition, the inexorability of a scheme timetable can cause problems for a court when there is a major development after the first court hearing.

Key Points:

Courts will remove liquidators where there's apparent bias even where it might cause significant inconvenience and expense to the liquidation.

The Full Court of the Federal Court has found that a conflict of interest arose in circumstances where liquidators were required to investigate transactions with an entity that also refers work to the liquidators (ASIC v Franklin; Re Walton Construction Pty Ltd [2014] FCAFC 85).

Key Points:

A forbearance arrangement is a useful instrument to ensure that both the lender and the customer are aligned on the proposed turnaround or workout.

On June 27, 2014, in National Heritage Foundation, Inc. v. Highbourne Foundation, 1 the United States  Court of Appeals for the Fourth Circuit, agreeing with decisions by the Bankruptcy Court for the Eastern  District of Virginia and the District Court for the Eastern District of Virginia, which were issued upon  remand from a prior appeal, held that the third-party non-debtor release provision in the chapter 11 plan  of reorganization of National Heritage Foundation, Inc.  was invalid.

Key Points:

A Senate Committee has said amendments to Australia's corporate insolvency laws should be considered to encourage and facilitate corporate turnarounds.

The Senate Economics References Committee called for a review of Australia's corporate insolvency laws to ensure they facilitate corporate turnarounds. One suggestion was for the implementation of certain features of the US' Chapter 11 regime into Australia's insolvency laws.

The arguments for changing the insolvency regime