Automatic Stay Not Violated by Retention of Property Seized Before Filing

The United States Supreme Court recently held that 11 U.S.C. § 362(a)(3), a provision of the automatic stay of the U.S. Bankruptcy Code, does not require creditors to take affirmative steps to return property that was seized before the filing of a debtor’s bankruptcy petition. City of Chicago, Illinois v. Fulton, 2021 WL 125106, ____ U.S. ____ (Jan. 14, 2021).

In Re Ando Credit Limited [2020] HKCFI 2775 (“Re Ando”), the Hong Kong Companies Court recently appointed provisional liquidators over a Hong Kong company, Ando Credit Limited, in novel circumstances with potentially significant consequences.

The New Jersey Appellate Division recently discharged a creditor’s judgment lien on the debtor’s property after the debtor declared bankruptcy and had the underlying debt discharged. SeeCooper Electric Supply Co., v. J & Jay Electric, Inc., 2020 WL 5496490 (N.J. Super. Ct. App. Div. Sept. 11, 2020). In 2008, plaintiff obtained a judgment against defendant and docketed the judgment. Although plaintiff received a writ of execution, the record was not clear on if plaintiff ever levied on defendant’s house.

In a precedential decision, the United States Court of Appeals for the Third Circuit held this week that a creditor had the ability to bring post-bankruptcy claims against a debtor if the bankruptcy trustee abandoned those claims. SeeIn re Wilton Armetale, Inc., 2020 WL 4460000 (3d Cir. Aug. 4, 2020). Artesanias was a creditor of Wilton, and obtained a judgment of around $900,000 against it. Artesanias eventually learned that another creditor, North Mill, had plotted with Wilton and a law firm, Leisawitz Heller, to plunder Wilton’s assets.

The Corporate Insolvency and Governance Act (the “Act”) received Royal Assent on 25 June 2020 and is now in force. As anticipated in our client alert of 26 May 2020, the Act represents the most extensive changes in the insolvency landscape since the Enterprise Act came into force in 2003.

The provisions of the Act contain both:

The Corporate Insolvency and Governance Bill (the “Bill”) was laid before Parliament on 20 May 2020 and represents the most extensive changes in the insolvency landscape since the Enterprise Act came into force in 2003. Many of the proposals were originally consulted on in 2016, but were not progressed in light of Brexit until the COVID-19 crisis led to an urgent need for rapid and responsive reforms. The Bill is expected to come into force in June at the earliest.

The provisions of the Bill contain both:

2019 was a momentous year for the energy sector: The U.S. became a net oil exporter for the first time in recorded history and at the same time energy dropped to less than five percent of the S&P 500 Index. With the precipitous drop in commodity prices and macroeconomic volatility triggered by the oil price war and COVID-19 pandemic, 2020 presents challenges and change for the global and domestic energy sectors. We thank all of our valued clients and look forward to working with you to anticipate and solve problems and capitalize on industry and global trends.

As the economic turbulence associated with the downturn in commodity prices and the outbreak of COVID-19 continues, many energy companies may find their debt trading at significant discounts. For companies trying to manage liability and liquidity, this presents an opportunity to selectively repurchase debt and de-lever at prices well below par. Energy companies that are well-situated to capitalize on this window should carefully consider the corporate and tax ramifications debt buybacks present.

Corporate Considerations

As the U.S. energy industry comes to grips with the most dire economic crisis in its history, wrought by an invisible virus and global oil price war, and with many exploration and production (E&P) producers substantially adjusting their capital and maintenance budgets, all parties must carefully assess their partners’ financial positions. The bankruptcy filing of a joint venture partner (whether operator or nonoperator) can lead to substantial problems for the other joint venture partner(s) and potentially hamstring operations on the co-owned lands.

With the havoc being wreaked by the COVID-19 virus on businesses and supply chains, shuttering many businesses and decimating certain industries, business owners and management are seeking guidance to help mitigate their risk of financial distress. Following is a checklist with specific action items for decisionmakers to review, recognizing that every situation is unique and there is no universal solution that will fit every business scenario in our current unprecedented economic environment.