On August 1, 2019 the U.S. Senate passed the Family Farmer Relief Act of 2019, which more than doubled the debt limit for “family farmers” qualifying for relief under Chapter 12 of the U.S. Bankruptcy Code to $10,000,000. The House of Representatives previously passed the same legislation on July 29, 2019; the legislation will now proceed to the White House for the President’s signature.

In Longoria v. Somers and LC Therapeutics, Inc., C.A. No. 2018-0190-JTL (Del. Ch. May 28, 2019), the Delaware Court of Chancery examined its authority to tax the costs of receivership against the stockholder of an insolvent corporation. The Court’s decision highlights an exception to the general principle that stockholders of a properly maintained corporation are not responsible for costs incurred by the corporation and illustrates a scenario where stockholders may be held liable for a corporation’s obligations.

In response to the Federal Energy Regulatory Commission (“FERC”), the U.S. Bankruptcy Court for the Northern District of California held that the rejection of wholesale power purchase agreements “is solely within the power of the bankruptcy court, a core matter exclusively this court’s responsibility.” [1]

Asset-backed or net asset value (NAV) facilities as a feature of the fund finance landscape are not new, but their prevalence and uses have increased over the last five years in particular.

Executive Summary

Last week, the Supreme Court (the “Court”) ruled a debtor in bankruptcy cannot use the Bankruptcy Code to cut off a licensee’s rights under a license to use the debtor’s trademarks. This ruling resolves a Circuit split and brings the treatment of trademark licenses from a bankrupt debtor in line with patent and copyright licenses, which are protected statutorily by Bankruptcy Code section 365(n).

On 27 March 2019, the Federal Court of Australia delivered an important decision demonstrating the Court's willingness to assist liquidators to streamline the procedural aspects of liquidations using technology with the aim of conserving assets for the benefit of creditors.

In a consultation issued by the UK tax authority, HM Revenue & Customs (HMRC), on 26 February 2019, a change in the order of asset distribution in the insolvency of UK companies has been proposed. The amendments would newly favour certain taxes collected and held by an insolvent entity ahead of certain secured and unsecured creditors and would come into force in April 2020.

Using a traffic light approach, we consider the sorts of amendments which might impact on "day one" security.

WHEN MIGHT AMENDMENTS PRESENT A PROBLEM?

In a recent opinion, the Second Circuit Court of Appeals held that a seller licensed under the Perishable Agricultural Commodities Act (“PACA”) could not entirely setoff payables owed to a bankrupt PACA merchant against receivables owed by the debtor. The ruling is a reminder to PACA-regulated parties that otherwise common operational practices such as setoffs may not be recognized and enforceable in bankruptcy or in PACA-regulated transactions.

As Parliament debates the draft Withdrawal Agreement prior to the vote on 11 December, this week's Q&A looks beyond the headlines at the potential impact of the proposed Brexit deal on a number of specific topics, including what the Political Declaration tells us about the shape of the future EU/UK trade agreement:

Alternative Investment Funds