The Insolvency Service (in reply to a letter from R3) has confirmed that it will be reframing its view of the term "creditor". This follows the cases last year of Pindar and Toogood where the court was asked to consider whether a paid secured creditor should have consented to an administration extension and therefore, in the absence of consent, whether the extensions were valid in both cases, the judges confirmed that the consent of paid secured creditors was not required.

Restructuring Plans (RPs)

2024 was a year of firsts for RPs, and as case law in this area continues to evolve, there is little doubt that this will carry through into 2025.

It would be remiss not to expect to see more RPs in 2025. News of Thames Water's restructuring is "splashed" all over the press and Speciality Steel's plan might see the first "cram up" of creditors, but there seems a long way to go to get creditors onside.

The below sets out key considerations when dealing with an extension of an administration at the end of the first-year anniversary.

Categorisation of a charge as fixed or floating will have a significant impact on how assets are dealt with on insolvency and creditor outcomes.

Typical fixed charge assets include land, property, shares, plant and machinery, intellectual property such as copyrights, patents and trademarks and goodwill.

Typical floating charge assets include stock and inventory, trade debtors, cash and currency, movable plant and machinery (such as vehicles), and raw materials and other consumable items used by the business.

In Coosemans Miami v. Arthur (In re Arthur), the Bankruptcy Court for the Southern District of Florida held last week that individuals in control of a PACA trust may still receive a bankruptcy discharge of debts arising from their breach of such PACA trust. A link to the opinion is here.

The Fifth Circuit recently issued an opinion that federal bankruptcy law does not prohibit a bona fide shareholder from exercising its right to vote against a bankruptcy filing notwithstanding that such shareholder was also an unsecured creditor. This represents the latest successful attempt to preclude bankruptcy through golden shares or bankruptcy blocking provisions in corporate authority documents.

On June 14, 2018, the United States Court of Appeals for the Fifth Circuit issued a revised opinion that held that Federal law does not prevent a bona fide shareholder from exercising its right to vote against a bankruptcy petition just because it is also an unsecured creditor. In re Franchise Servs. of N. Am., Inc., 891 F.3d 198, 203 (5th Cir. 2018), as revised (June 14, 2018).

Weird things happen in bankruptcy court. All you high-falutin Chapter 11 jokers out there, cruise down to the bankruptcy motions calendar one day.

Bankruptcy courts have authority to hold in civil contempt one who refuses to comply with a bankruptcy court order, including incarceration and/or daily fines until the offender complies.[1] But when does civil contempt[2] cross into criminal contempt, which is punitive and outside

The recent decision from the United States Supreme Court in Lamar, Archer & Cofrin, LLP v. Appling (“Lamar”), further restricts a creditor’s ability to pursue future recovery on its debt through a nondischargeability action in a debtor’s bankruptcy. On June 4, 2018, the Court ruled in Lamar that a debtor’s false statement about a single asset must be in writing before the creditor’s debt can be excepted as nondischargeable in bankruptcy.