Part 1 – Celsius Bankruptcy
This alert was written by Geoffrey Wynne, Alexandra Shipulina and Szonja Kolbenheyer (trainee solicitor)
The Act
The Corporate Insolvency and Governance Act 2020[1] ("the Act") received Royal Assent on 25 June 2020. The overarching purpose of the Act is to protect as many businesses as possible from falling into administration or insolvency as a result of the disruptions and hardship caused by the pandemic.
The emergence of COVID-19 (the Coronavirus) at the end of 2019 has had an unprecedented impact on the global economic system. This alert focuses on the effect the Coronavirus pandemic is likely to have on small and medium sized businesses (SMEs), their lenders in the UK and the options available to continue trading and avoid insolvency.
Since online auctioneer Paddle 8 filed for bankruptcy protection in March, creditors of the company have begun filing their notices of claim in the bankruptcy case. One thing on which the creditors all seem to agree is that the current assets of Paddle 8 will be insufficient to cover its debts by a considerable margin. Paddle 8’s lenders and commercial landlord are by far the largest creditors, and standing out from the crowd will be difficult.
The novel coronavirus COVID-19 pandemic has the potential to impact the U.S. economy at a level which could ultimately rival or surpass the global financial crisis of 2009. Reports from commercial landlords suggest that a majority of retail and restaurant tenants, perhaps as many as 75%, failed to make payments of rent due on April 1st.
Early last week the online auctioneer Paddle 8 filed for Chapter 11 bankruptcy in the Southern District of New York, on the heels of a recent lawsuit demanding payment for works of art sold at a charitable auction last November.
Decision is a Win for Trademark Licensees
Article 55 of the Bank Recovery and Resolution Directive (BRRD) (2014/59/EU) requires Member States to ensure that a bail-in clause is included in agreements containing liabilities of a regulated Member State financial institution which are governed by the law of a third country.
Last week, the United States District Court for the District of Delaware (the “Court”) reversed a 2015 decision by the Delaware Bankruptcy Court (the “Bankruptcy Court”) disallowing the portion of an unsecured claim filed by appellant Wilmington Trust Company (“WTC”) for postpetition attorneys’ fees and costs incurred under an indenture in connection with the In re Tribune Media Co. chapter 11 cases.
Indenture trustees and agents participate in the administration of chapter 11 cases in a number of ways, including by protecting holders’ rights, ensuring compliance with the applicable indenture and other agreements, and fulfilling their duties and responsibilities under applicable law.