The United States Second Circuit has issued its ruling in the Momentive Performance Materials casesresolving three separate appeals by different groups of creditors of Judge Bricetti’s judgment in the United States District Court of the Southern District of New York, which affirmed

On 1 September 2017, Boart Longyear Limited (Boart), successfully implemented the reconstruction of its US law governed debt using Australian creditor schemes of arrangement (Schemes).

This is a landmark case that will influence Australian corporate reconstructions for years to come.

The case involved approval by the NSW Supreme Court and recognition by the US Bankrupcty Court under Chapter 15 of the US Bankruptcy Code, ensuring cross border effectiveness for the reconstruction.

Highlights

The Supreme Court in London today gave judgment in the Waterfall I appeal, a dispute as to the distribution of the estimated £8 billion surplus of assets in the main Lehman operating company in Europe, Lehman Brothers International (Europe) (LBIE).

LBIE entered administration on 15 September 2008 and has now paid its unsecured creditors dividends of 100p in the £. The Waterfall I Supreme Court appeal addressed some of the key issues as to who should receive the surplus, which we discuss below.

“So-called” Currency Conversion Claims

The French conciliation procedure, introduced in 2005, has become such a key procedure in France that it cannot be ignored. For any restructuring involving France (whether partially or wholly), the possibility of a conciliation procedure has to be seriously considered.

Concept of conciliation procedure

Overview

In Asarco, LLC v. Noranda Mining, Inc., the Tenth Circuit Court of Appeals held that representations made to the bankruptcy court that the Debtor’s settlement of environmental claims reflected only the Debtor’s share of the cleanup costs did not judicially estop the Debtor from brining a contribution claim against another potentially responsible party for those same costs.

External administrators of companies can now assign any right to sue that is conferred on them by the Corporations Act, for example voidable transaction claims and insolvent trading claims. Previously these were considered rights that could only be utilised by the appointed liquidator and so could not be assigned. Now they can.

When did this start?

• This has already begun. It commenced on 1 March 2017.

What legislation brought this about?

Background: Professionals’ Fees in Chapter 11 cases

The New South Wales Court of Appeal granted leave to appeal following a finding that certain documents relating to attempts to secure litigation funding were not privileged.

Good news: structured dismissals have survived Supreme Court scrutiny. Bad news: dismissals may be harder to structure, given yesterday’s 6-2 decision overruling the Third Circuit in Jevic narrowing the context in which they can be approved. We now have guidance on whether or not structured dismissals must follow the Bankruptcy Code’s priority scheme. The short answer is that they must.

In a recent decision by the United States Bankruptcy Court for the District of Delaware, In re Hercules Offshore, Inc., et al., Judge Kevin J. Carey confirmed Hercules Offshore’s plan over objections by the Equity Committee—including an objection to allegedly impermissible plan releases and exculpations.

Background