“The Congress shall have Power To . . . establish . . . uniform Laws on the subject of Bankruptcies throughout the United States.”

–U.S. Constitution’s Bankruptcy Clause (Art. 1, Sec. 8, cl. 4).

An Old Losing Streak—Article III

Analizamos las principales novedades en materia de insolvencia internacional contenidas en el Proyecto de Ley de reforma del Texto Refundido de la Ley Concursal. Sin perjuicio del texto final que resulte aprobado tras la correspondiente tramitación parlamentaria, el capítulo dedicado a la insolvencia internacional es uno de los que menos enmiendas han recibido y, por tanto, donde previsiblemente se producirán menos cambios.

We analyze the main novelties of the international insolvency regulation introduced in the Insolvency Law Reform Bill. Although the final wording will be approved after its passage through parliament, the chapter on international insolvency is among those that received the fewest amendments and therefore is expected to see the fewest changes. We therefore predict that all or a large part of the comments made below will also be applicable to the wording of the Insolvency Law that will be approved at the end of the process.

“No State shall . . . pass any . . . Law impairing the Obligation of Contracts.”

–Art. I, Sec. 10, U.S. Constitution

Increasingly, states are expanding their laws on debtor/creditor relationships, such as receiverships and assignments for benefit of creditors.

Some of these expansions look suspiciously like a Bankruptcy Code Lite—e.g., adding “stay” provisions.

And that can be a constitutional problem, according to long-standing (and recent) opinions of the U.S. Supreme Court.

What follows is a brief summary of three such opinions.

The European Court has issued a sentence of special relevance for the operation and effectiveness of the “pre-pack” insolvency procedures. Specifically, it clarifies the requirements that must be met to respect the rights of workers in the event of business transfers.

El tribunal ha dictado un auto que se detiene sobre determinadas prácticas que se han producido en las subastas extrajudiciales de algunos procesos de liquidación. Concretamente, descarta la posibilidad de cobrar una comisión cuando el adjudicatario en la subasta es el propio acreedor con privilegio especial.

The appeal court has issued a decision which constitutes a reminder to be careful in relation to practices that have been occurring in certain out-of-court auctions within liquidation proceedings. Particularly, it rejects the possibility that a commission fee is collected when the winning bidder is the secured creditor whose security interest levies the asset sold.

El órgano judicial europeo ha dictado una sentencia de especial relevancia para el funcionamiento y efectividad de los 'pre-packs' concursales. En concreto, aclara los requisitos que se deben cumplir para respetar los derechos de los trabajadores en caso de transmisión de empresas.

There’s a new U.S. Circuit Court opinion on a person’s right to a jury trial, when sued by the Securities and Exchange Commission before one of its administrative judges.

And guess what:

This is reality:

• Small businesses reorganize, all the time, under Subchapter V;
• Farmers reorganize, all the time, under Chapter 12; and
• Large businesses reorganize, all the time, under regular Chapter 11.

That’s because all of those three types of debtors have bankruptcy reorganization processes designed specifically for them.

Middle Market Debtors