On December 1, 2016, the amendments to Bankruptcy Rule 3002.1 aimed at clarifying when a secured creditor must file a payment change notice (“PCN”) in a Chapter 13 bankruptcy take effect. The new rule requires secured creditors to file PCNs on all claims secured by the Chapter 13 debtor’s primary residence for which the debtor or Chapter 13 Trustee is making post-petition payments during the bankruptcy, without regard to whether the debtor is curing a pre-petition arrearage.

In Huff Energy Fund v. Gershen, C.A. No. 11116-VCS, the Delaware Court of Chancery dismissed a stockholder’s challenge to the board of director’s decision to dissolve the company following an asset sale. The Court ruled that the enhanced scrutiny standards of Revlon and Unocal do not supplant the business judgment rule in the context of a company’s decision to dissolve.

Recent cases we have been involved in have highlighted the need for Insolvency Practitioners to pay careful attention to the effect that block transfer orders have on administrations where the exit route is a creditors' voluntary liquidation ("CVL"). Failure to do so could risk the appointment of liquidators being invalid.

The statutory requirements

Campbell v Peter Gordon Joiners Ltd (in liquidation) and another (2016) UKSC 38 considered whether an employee could successfully bring a civil action against a director of a company in liquidation for having failed to obtain appropriate employers' liability insurance.

C was an apprentice joiner employed by a company who suffered an injury at work whilst working with an electric saw. The company held employers’ liability insurance but it did not respond to C's claim as the policy excluded claims arising from the use of “woodworking machinery” powered by electricity.

When the board of Hanjin Shipping voted unanimously to file for receivership at the end of August, it precipitated the largest container line bankruptcy in history. The collapse of the company is partly due to the pressure on the shipping industry, which has been unrelenting since the 2008 financial crash. Much of this has to do with the increase in capacity in the industry – vessels built in the 1990s typically carried around 2,000 TEUs; by 2015 this had increased to 10,000.

On 20 June 2016, Rio de Janeiro-based Oi SA, Brazil’s fourth-largest telecom company, filed the largest judicial reorganisation petition in Brazil’s history, days after debt restructuring talks with creditors collapsed. The filing of Oi and six subsidiaries lists 65.4 billion reais (USD19.26 billion) in debt. The company has also filed for Chapter 15 protection in the U.S.  As from the date of filing the accrual of interests, penalties, monetary correction and late charges are suspended and will only become enforceable if the judicial reorganisation becomes a bankruptcy.

El 20 de junio de 2016 Oi SA, la cuarta empresa brasileña de telecomunicaciones, con sede en Río de Janeiro, presentó la solicitud de reorganización judicial más grande en la historia de Brasil, tras el colapso de negociaciones con acreedores para reestructurar deuda. La solicitud de Oi y sus seis subsidiarias comprenden en total una deuda de 65.4 billones de reales (USD19.26 billones). La empresa también solicitó la protección Chapter 15 en los EE.UU.

The Third Party (Rights Against Insurers) Act 2010 (the “2010 Act”) finally comes into force on 1 August 2016.

The 2010 Act makes it easier for a third party to bring a claim against an insurer when the insured party has become insolvent. The 2010 Act will replace the Third Parties (Rights Against Insurers) Act 1930 (the “1930 Act”) and is designed to extend and improve the rights of third party claimants.

Shlosberg v Avonwick Holdings Ltd & Ors [2016] EWHC 1001

Law firm Dechert LLP has been ordered to cease acting for the principal creditor of bankrupt Russian businessman, Mr Shlosberg, because it also acted for the trustees in bankruptcy, and accordingly had had access to documents subject to Mr Shlosberg's legal professional privilege.

Facts

Policyholders contemplating insurance coverage settlements with low-level insurers should use caution to preserve their ability to access higher-level excess policies. Excess insurers are increasingly disputing that underlying policies are properly exhausted where policyholders elect to settle with underlying insurers for less than full limits. The issue can be further complicated if the policyholder seeks protection under the bankruptcy laws against long-tail liabilities, as a recent case illustrates.