This week’s TGIF considers a recent decision of the Supreme Court of New South Wales (Forex Capital Trading Pty Ltd (in liquidation) v Invesus Group Limited [2024] NSWSC 867). Justice Ball determined that admission of a proof of debt by a liquidator was not akin to a judgment or settlement, and that such an admission did not create a new liability of the company.
11 U.S.C. § 1191(c)(2) provides (emphasis added):
- “(c) . . . the condition that a plan be fair and equitable . . . includes . . . (2) . . . all of the projected disposable income of the debtor to be received in the 3-year period, or such longer period not to exceed 5 years as the court may fix, . . . will be applied to make payments under the plan.”
There is little-to-no guidance in the Bankruptcy Code on what “as the court may fix” might mean. So, that meaning is left to the courts to decide.
Under 11 U.S.C. § 727(a)(2), an individual debtor may be denied a discharge, in its entirely, for making a transfer “with intent to hinder, delay, or defraud” a creditor or the trustee.
On April 17, 2023, the Bankruptcy Court for Eastern Michigan ruled:
In UKCloud Ltd(Re Insolvency Act 1986) [2024] EWHC 1259 (Ch), the court was again faced with the age-old question of categorisation of a security interest but this time in respect of a new type of asset, internet protocol (IP) addresses. Could fixed charge security be taken over IP addresses and, if so, was it taken here?
A “silent” creditor in Subchapter V is one who does not vote on the debtor’s plan and does not object to that plan. The “silent” creditor is a problem for Subchapter V cases.
The Problem
Here’s the problem:
Sian Participation Corp (In Liquidation) (Appellant) v Halimeda International Ltd (Respondent) (Virgin Islands) [2024] UKPC 16
Here are a couple discharge-related bankruptcy questions I’ve heard of late, along with an answer.
Question 1. Why are individuals, but not corporations, eligible for a Chapter 7 discharge?
- §727(a)(1) says, “the court shall grant the debtor a discharge, unless—(1) the debtor is not an individual” (emphasis added).
Question 2. Why are individuals, but not corporations, subject to § 523(a) discharge exceptions in Chapter 11?
In March 2015 the major high street retailer British Home Stores (BHS) was acquired for £1 by Retail Acquisitions Limited (RAL), a company owned by Mr Dominic Chappell. Mr Chappell became a director of the BHS entities upon completion of the purchase, together with three other individuals.
What happens to a company at the end of an administration is a question that probably only keeps insolvency anoraks up at night.
There are a limited number of potential options, with the rescue of the company as a going concern being the number one objective to which all administrators aspire. However, more often than not, an administration will end with the company entering liquidation or, where the company has no property to permit a distribution to creditors, the dissolution of the company.
In In the matter of Academy Construction & Development Pty Ltd (subject to Deed of Company Arrangement) [2024] NSWSC 808, the New South Wales Supreme Court had to determine whether to terminate a Deed of Company Arrangement (DOCA) on the basis that it was oppressive, unfairly prejudicial or discriminatory.
Key Takeaways