In an opinion filed on July 3, 2014, in the case of In re Lower Bucks Hospital, et al., Case No. 10-10239 (ELF), the United States Court of Appeals for the Third Circuit (Third Circuit) affirmed a decision of the United States Bankruptcy Court for the Eastern District of Pennsylvania (Bankruptcy Court), which denied approval of third-party releases benefitting The Bank of New York Mellon Trust Company, N.A., in its capacity as indenture trustee (BNYM, or the Trustee).
On May 28, 2014, the District Court for the Southern District of New York affirmed an order from the bankruptcy court in Dishi & Sons v. Bay Condos LLC, et al.1, approving a sale of the Debtor’s assets, but found that the Debtor’s commercial tenant was entitled to remain in possession of the premises for the remainder of the lease at the specified rent.
In 2011, the US Supreme Court issued its landmark decision in Stern v. Marshall. Turning decades of bankruptcy practice on its head, the Supreme Court held that, even though bankruptcy courts are statutorily authorized to enter final judgments in “core” matters, Article III of the Constitution prohibits them from finally adjudicating certain core matters, such as a debtor’s state law counterclaim against a creditor (so-called “Stern claims”).
A bankrupt trustee has been unsuccessful in trying to recover property of a former bankrupt more than 20 years after the date of bankruptcy. The decision of the Federal Court reinforces the limitation period in which a trustee can make a claim on any property of the bankrupt as outlined in Section 127(1) of the Bankruptcy Act 1966 (Cth) (Act)
Stewart v Atco Controls Pty Ltd (in Liquidation) [2014] HCA 15
The High Court this week reinforced the significance and standing of a Liquidator's equitable lien for his or her costs and expenses incurred in realising assets of a company in liquidation, as first clearly espoused by Justice Dixon in the 1933 case of Universal Distributing. Gadens acted for the successful Liquidator/Appellant in the unanimous judgment of the five High Court Justices.
The Principle
Often times indenture trustees seek to sit on creditors committees in furtherance of their fiduciary duties to holders. Obviously, the professional fees and expenses can be paid as a first priority pursuant to a charging lien as provided for under the indenture documents. The payment of such fees and expenses becomes an issue, however, when there are no plan distributions to holders or the plan distributions are illiquid or non-cash.
Introduction
Does the ATO have priority over secured creditors in a liquidation? Is a receiver required to account to the ATO for any tax payable out of funds received on the sale of an asset before accounting to the secured creditor? Are receivers and liquidators personally liable for the tax payable from funds received by them? Can receivers and liquidators avoid such personal liability by distributing funds received to creditors before a tax assessment arises? These issues were at the centre of a Federal Court judgment handed down on 21 February 2014.
Two days before Christmas, the Supreme Court of New South Wales delivered a bonus for the general unsecured creditors of the collapsed discount giant Retail Adventures, and confirmed the requirements for deeds of company arrangement.
Deeds of Company Arrangement
Today the High Court of Australia handed down a decision which confirms a liquidator has the green light to disclaim leasehold interests in land (Willmott Growers Group Inc v Willmott Forests Limited (receivers and managers appointed)(in liquidation)).
Due to the way in which the case came before the Courts, the High Court did not consider the application of s568B of the Corporations Act 2001 (Cth) (Act).
This section allows tenants to challenge in Court the liquidator’s disclaimer.
11/13/13: “Goal for CFPB chief: Calming conflict on car loans”