In a recent decision, the Fifth Circuit narrowly held that federal law does not prevent a bona fide shareholder from exercising its voting right in the company’s charter to prevent the filing by the company of a bankruptcy petition merely because it is also an unsecured creditor. In re Franchise Servs. of N. Am., Inc., 891 F.3d 198, 203 (5th Cir. 2018).

A recent case in the UK (Phones 4U Limited -v- EE Limited) serves as a warning to businesses of the unintended, and potentially costly, consequences of issuing inadequate termination notices to contractual counterparties.

Background

McDowell Purcell represented a creditor in a recent application to the High Court where Justice Costello granted an Order for Sale on foot of an equitable charge held by the applicant, over properties of the respondent who had been adjudicated a bankrupt.

Application

In Momentive Performance Materials, the Second Circuit declined to dismiss as equitably moot the appeals of certain noteholders.

Last week, in Merit Management Group, LP v. FTI Consulting, Inc.1 the Supreme Court settled a split in the circuit courts, unanimously holding that the safe harbor provision created by 11 U.S.C. § 546(e), 11 U.S.C.

It’s been an interesting couple of weeks for bankruptcy at the United States Supreme Court with two bankruptcy-related decisions released in back-to-back weeks. Last week, the Supreme Court issued an important decision delineating the scope of section 546(e) of the Bankruptcy Code (discussed here [1] for those who missed it).

Yesterday, the United States Supreme Court, in Merit Management Group, LP v. FTI Consulting, Inc., Case No. 16-784, ruled that the “securities safe harbor” under section 546(e) of the Bankruptcy Code, 11 U.S.C. §§ 101-1532, does not shield transferees from liability simply because a particular transaction was routed through a financial intermediary—so-called “conduit transactions.”

The High Court delivered a stark reminder to personal insolvency practitioners (PIPs) that they serve an integral role in upholding the legitimacy of the bankruptcy process in a judgment delivered on 5 February 2018.

Background

The judgment arose out of an application by the Official Assignee (“OA”) to postpose the automatic discharge of a bankrupt. The OA submitted that the bankrupt had hidden assets from or failed to disclose assets which could have been realised for the benefit of the creditors of her estate.

Business Finance and Restructuring What will 2018 hold? Horizon scanning for 2018 Legal Outlook Legislative changes Reform of English corporate insolvency framework The Insolvency Service has yet to react to responses to its consultation in mid-2016 on significant reforms designed to improve the restructuring tools available to companies.1 We had expected the government to push this forward in 2017, but the reforms appear to have stalled and the issue was sadly missing from the Queen’s Speech.

Weil have acted for Mike Pink, Richard Heis and Ed Boyle of KPMG as special administrators of MFGUK in connection with a CVA proposal to its remaining ordinary creditors, which will facilitate the winding-up of the estate for the benefit of the creditors.