“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”
- From 11 U.S.C § 1183(b)(7)(emphasis added).
Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.
My purpose in this multi-part series is to provide observations on the facilitation role.
The Cayman Islands Grand Court recently delivered its judgment in Re Shinsun Holdings (Group) Co., Ltd. FSD 192 of 2022 (DDJ) (21 April 2023) (unreported) (the “Shinsun Judgment”) in which the court determined the ultimate beneficial owner of bonds, held through Euroclear, did not have standing or authority to progress a winding up petition as a contingent creditor. In this article, we explore similar cases in other offshore and common law jurisdictions.
Shinsun Judgment and the Cayman Position
“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”
- From 11 U.S.C § 1183(b)(7)(emphasis added).
Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.
My purpose in this multi-part series is to provide observations on the facilitation role.
根据英国最高法院 2022 年底 Sequana1 的判决 ，新西兰最高法院在涉及 Mainzeal Property and Construction Limited2清算财产的长期案件中，对破产区公司董事所承担的义务问题进行了权衡及作出有力贡献。
当世界各地的董事们正努力应对各种宏观经济因素带来的困难和不确定时期时，这些决策为董事们应采取哪些保护自己及公司的方法提供了有用且及时的指导。
这可能意味着听取有关停止交易的建议，尝试签订重组支持协议或任命官员提供协助。在开曼群岛，新的重组支持官员制度提供了一个有用的体系，为董事提供休整期，以便在适当的情况下促进和实施可行的计划。
Mainzeal 的最新决定再次提醒大家，公司董事未能采纳建议和采取适当行动可能会导致严重后果。
Mainzeal 决定
“Learn something new every day,” is a well-worn adage.
And it’s mostly true (I only question giving a literal meaning to the “every day” part).
Nevertheless, I’m embarrassed to acknowledge learning only recently of the existence of a noteworthy, bankruptcy-related statute: 28 U.S.C. § 959(a). Such statute reads in part (emphasis added):
Excluded from Subchapter V eligibility is a “single asset real estate” debtor.
We have a recent opinion on a Subchapter V debtor who beats that exclusion: In re Evergreen Site Holdings, Inc., [Fn. 1]
What follows is a summary of that opinion.
Eligibility Issue & Standards
The Evergreen issue is this:
In a mass-tort bankruptcy, when 95% of 120,000 creditors vote to accept a mediated plan paying over $7 billion to creditors, shouldn’t the plan be confirmed?
1.1 The overriding objective
(1) The overriding objective of these rules is to enable the court to deal with cases justly.
(2) Dealing justly with the case includes –
(a) ensuring, so far as is practicable, that the parties are on an equal footing;
(b) saving expense;
(c) dealing with cases in ways which are proportionate to the –
(i) amount of money involved;
(ii) importance of the case;
(iii) complexity of the issues; and (iv) financial position of each party;
(d) ensuring that it is dealt with expeditiously; and
Subchapter V eligibility requires a debtor to be “engaged in” commercial/business activities.
Case Law Consensus
Case law consensus is that such activities must exist on the petition filing date. That means a debtor cannot utilize Subchapter V when:
- business assets are fully-liquidated;
- unpaid debts are the only remnant of the failed business; and
- prospects for resuming such activities are nil.
So . . . here’s the question: Is that the right eligibility standard?
I say, “No.”
A Hypothetical
Contrasting opinions from any court, issued a month apart, are always instructive.
And we have a new such thing—from the U.S. Supreme Court, no less, and from May and June of this year. The contrast is on this subject: whether sovereign immunities of Puerto Rico and of a federally recognized tribe are abrogated in bankruptcy.