Since the beginning of the 21st century and the first big wave of security enforcements in Germany, who holds the entitlement to enforce a share pledge between pledgees and insolvency administrators has caused countless disputes. This issue has now been resolved by a recently released judgment of the German Federal Supreme Court of 27 Oct 2022 (case no.: IX ZR 145/21), which has now held that pledged shares as well as pledges over certain other non-movable rights such as trademarks or patents can be enforced by the pledgee (only) and not by the administrator.
This week, the United States Supreme Court issued its opinion in Bartenwerfer v. Buckley, unanimously holding that a debtor cannot discharge a debt obtained by fraud even if the debtor himself/herself did not personally commit the fraud.
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Executive Summary
Introduction
Today, the UK Supreme Court considered for the first time the existence, content and engagement of the so-called “creditor duty”: the alleged duty of a company’s directors to consider, or to act in accordance with, the interests of the company’s creditors when the company becomes insolvent, or when it approaches, or is at real risk of, insolvency.
What happens when a shady businessman transfers $1 million from one floundering car dealership to another via the bank account of an innocent immigrant? Will the first dealership’s future chapter 7 trustee be allowed to recover from the naïve newcomer as the “initial transferee” of a fraudulent transfer as per the strict letter of the law? Or will our brave courts of equity exercise their powers to prevent a most grave injustice?
Retired U.S. Bankruptcy Judge Robert E. Gerber once observed that “issues as to the interplay between environmental law and bankruptcy are among the thorniest on the litigation map.” Difficulties navigating this interplay largely stem from the inherent conflict between the goals of bankruptcy and environmental laws, with the former aimed at providing debtors with a fresh start, while the latter cast a broad net to hold parties (even some innocent parties) responsible for past harm to the environment.
The Supreme Court has agreed to hear a dispute between Mall of America and Transform Holdco LLC as to whether a lease Transform acquired at a bankruptcy sale can be challenged after that sale has closed. Sections 363(b)(1) and 363(m) of the Bankruptcy Code are at play here. Section 363(b)(1) generally permits a bankruptcy trustee, after notice and hearing, to use, sell, or lease property that belongs to the bankruptcy estate outside of the ordinary course of business.
A foreign (non-U.S.) company can be dragged unwillingly into a U.S. bankruptcy case if the bankruptcy court has “personal jurisdiction” over the company.