Careful contract negotiation can limit the potential damage from insolvency in a construction firm’s supply chain.

Four decades and several years ago, Congress repeals the Federal Bankruptcy Act of 1898 and replaces it with the Bankruptcy Reform Act of 1978, aka the “Bankruptcy Code.”[Fn. 1]

A decade later, Justices on the U.S. Supreme Court are still disparaging the new Bankruptcy Code as the “sweeping changes Congress instituted in 1978” and “the radical reforms of 1978.”[Fn. 2]

Every now and then we get an example of how a process should work.

That’s exactly what we have, regarding confirmation of a contested Subchapter V plan, in the case of In re Lapeer Aviation, Inc., Case No. 21-31500 in the Eastern Michigan Bankruptcy Court.

In an opinion issued October 12, 2022, (Doc. 264), the Lapeer Court declares that, (i) most of the plan confirmation standards are satisfied, but (ii) the plan is deficient under two confirmation standards and, therefore, cannot be confirmed.

During a November 9, 2022, hearing on summary judgment motions in the Hertz bankruptcy, Delaware Bankruptcy Judge Mary F. Walrath issues the following oral ruling:

Whilst creditors’ voluntary liquidations (CVLs) have spiralled in number in recent months, the formerly popular company voluntary arrangement (CVA) has fallen out of the limelight. There were only 29 registered CVAs in Q3 2022, representing just 1% of recorded company insolvencies and languishing behind administrations (also down in number compared with Q2 2022).

A falling trend

Cryptocurrency exchange FTX has filed for bankruptcy in the USA after the proposed bail-out by rival exchange, Binance, fell through earlier this week.

With rising insolvency rates, driven in particular by the number of creditors’ voluntary liquidations reaching record highs, the decision in the recent Court of Appeal case of PSV 1982 Limited v Langdon [2022] EWCA Civ 1319 serves as a timely reminder for directors of the personal risks involved in re-using the name of a liquidated company.

The case is Wells v. McCallister, Case No. 21-1448 in the United States Supreme Court.

The question presented is:

• whether a debtor’s homestead exemption, existing on the date of bankruptcy filing, can vanish if the debtor sells the homestead during the bankruptcy and does not promptly reinvest the proceeds in another homestead.

The Petition for writ of certiorari explains:

For some reason, there is a fascination out there (not sure where, exactly) with having every assignment for benefit of creditors (“ABC”) supervised by a court from the get-go. 

This fascination suggests that every ABC effort requires court action and judicial approvals, from the beginning and throughout the assignment, to assure that everything about the ABC and its administration is on the up-and-up.

Startling and Puzzling

This fascination is both startling and puzzling.  Here are some reasons why.

In its Siegel v. Fitzgerald opinion, the U.S. Supreme Court declares that disparate quarterly fee amounts between U.S. Trustee and Bankruptcy Administrator districts are unconstitutional, under the uniformity requirement of the U.S. Constitution’s bankruptcy clause.

The most recent fallout from that opinion is the following docket entry by the U.S. Supreme Court in a different case with the same issues: