Chapter 15 of the Bankruptcy Code,1 the U.S. enacted equivalent of the UNCITRAL Model Law On Cross-Border Insolvencies, has received a fair amount of use by distressed shipping companies since it was enacted in 2005. In 2007, we wrote in these pages that Chapter 15 might provide a welcome U.S. safe harbor. (See “Shipping, Finance, and Insolvencies: A Homeport in the United States?” Mainbrace, June 2007, No. 2). More recently, in 2009, we published “Shipping, Finance, and Insolvencies: The Black Swan Comes Home to Roost” (Mainbrace, January 2009, No.
This bulletin is a cross-country update presented by the national Restructuring & Insolvency Group. It discusses the key cases across the country involving debtor-inpossession (DIP) financing, court-ordered charges and other priority claims and disputes in recent Canadian insolvency proceedings.
Introduction
Section 8 of the Interest Act (Canada) (the Act) was considered by the Ontario Superior Court of Justice in Grant Forest Products Inc. (Re) in the context of an inter-creditor dispute.
Recently, a Delaware bankruptcy court denied a purchaser of claims its recovery because of judgments against the original holders of the claims from whom the claims were purchased. The case,In re KB Toys, Inc., et al., 470 B.R. 331 (Bankr. D. Del.
In a recent decision, Senior Transeastern Lenders v. Official Comm. of Unsecured Creditors (In re TOUSA, Inc.), 2012 US App. LEXIS 9796 (11th Cir. May 15, 2012), the 11th Circuit Court of Appeals overturned a district court decision which had forcefully quashed a bankruptcy court decision to avoid, as a fraudulent transfer, a $400 million settlement and loan repayment by a parent company to a group of lenders (the “Transeastern lenders”).
Pennsylvania Bar Institute Course
In Re Indalex Limited, the OCA surprised insolvency, pension and financial services professionals by ruling that pension plan deficiency claims can have priority over the claims of DIP lenders in the context of Companies’ Creditors Arrangement Act proceedings.
On Thursday, December 1, 2011, a three-judge panel of the Supreme Court of Canada granted leave to appeal from the decision of the Court of Appeal for Ontario in Re Indalex.
Recent trade publications have prophesized a wave of shipping bankruptcies. We have already seen several in the United States in 2011, such as Omega and Marco Polo. Trailer Bridge and General Maritime fi led in November. There will undoubtedly be more, despite the potential debtors having little or no connection to the United States. In this respect, non-U.S. listed shipowning companies considering restructuring and reorganization may not factor in the potential for a U.S. main proceeding under Chapter 11 reorganization on the assumption that they do not qualify to be U.S. debtors.
A recent decision of the Delaware bankruptcy court serves as a reminder of a key risk for lenders who finance leveraged transactions—namely, that a bankruptcy court may “collapse” the components of a leveraged transaction in order to avoid the lender’s liens and the debtor’s loan obligations as fraudulent transfers.