Winding Down. If a corporation’s board of directors decides that the business needs to be wound down, there are a number of legal paths to consider. Determining the best approach is fact-dependent, and the corporation and its board should get legal advice before making a decision.

Of general interest is the appeal in the case of Horton v Henry, on which we reported in our January 2015 update. In Horton, the High Court declined to follow a previous ruling, and decided that a bankrupt could not be compelled to access his pension savings to pay off creditors.

Under section 550(a) of the Bankruptcy Code, a trustee or debtor in possession may recover property (or its value) that has been fraudulently transferred “from the initial transferee or the entity for whose benefit the avoided transfer was made.”  While the trustee’s right to recover from an initial transferee is absolute once a transfer is deemed fraudulent, a subsequent transferee may assert affirmative defenses that could prevent recovery by the estate of an otherwise avoidable transfer.  As a result, defendants in fraudulent transfer litigations often take great pains to chara

The Financial Times has reported that Towergate, a loss making insurance broker with debts of up to £1bn, may be about to breach the terms of its loans. According to these reports, a paymentis due to Towergate’s secured creditors on Monday, 2nd February 2015, and another is due to its unsecured creditors two weeks later. These payments are reported to be worth about £30m. Towergate’s board is said to be weighing up rival restructuring bids this weekend, in an effort to save the business.

Introduction

In this Banking Reform updater we examine the single resolution mechanism (SRM), which together with the single supervisory mechanism (SSM) (Banking Reform updater 10) forms the key pillars of the EU Banking Union.

What is the SRM?

Declining to follow a 2012 decision, the High Court has ruled that a bankrupt’s unexercised rights to draw his pension did not represent income to which he was entitled within the meaning of the Insolvency Act 1986, and so did not form part of the bankruptcy estate.

Background

The process of repossession will involve complex issues of fact and law. Each one is different depending upon the jurisdiction involved, the approach of the operator and the attitude of the relevant authorities.

Information and planning

1. What is the risk if a counter-party is located in an exiting member state?

What might be the funding risk?

A member state exit is likely to result in increased liquidity problems and less available funding as financial institutions manage their exposure to the Eurozone. Businesses may find that traditional sources of finance (loans, bonds etc) are less easy to obtain or raise.

Intra group funding may also be problematic if there are intra-company loans to subsidiaries located in risk member states and those subsidiaries are having difficulty meeting their payment obligations under such loans.

On December 8, 2014, the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11 issued an extensive report detailing hundreds of recommended changes to the Bankruptcy Code to address significant economic and financial developments since the enactment of the Bankruptcy Code in 1978.  The recommendations aim to reduce the cost of chapter 11, increase the predictability of disputes by resolving ambiguous and divergent case law, provide more flexibility for debtor in possession financing, curb the power of senior lenders, and increase protections for creditors when a