Key points

At-a-glance cases provided by Gatehouse Chambers’ Insolvency Team, featuring:

Introduction

In this case the Court applied traditional constructive trust principles to disputed facts in order to determine whether a specific property came within the estate of a bankrupt. It will be of interest to practitioners advising in the area of challenged transfers in the context of insolvency.

The Trustees in the bankruptcy of Shaun Collins made an application pursuant to s.339 Insolvency Act 1986, to challenge a disposition of land. The land in question was a flat and the disposition was a 2021 transfer of a flat in London.

Dispute Resolution analysis: In a judgment which brings to a conclusion the trial of the former BHS directors, the Court has held the directors joint and severally liable for the increase in net deficiency of the company arising out of breaches of duty which caused the company to continue trading.

Wright and others v Chappell and others; Re BHS Group Limited [2024] EWHC 2166 (Ch)

What are the practical implications of this case?

Summer 2024 Editor: Melanie Willems IN THIS ISSUE “Seething on a jet plane” - conditions precedent and time of the essence in commercial contracts by Jack Spence 03 09 11 24 Diamonds aren’t forever: who is vicariously responsible when they have been stolen?

On May 16th, the DOL released interim final rules (the “Final Rules”) and an amendment to Prohibited Transaction Exemption 2006-06 (the “Amendment to PTE”), effective July 16, 2024, amending the DOL’s Abandoned Plan Program (the “APP”) to allow Chapter 7 bankruptcy trustees to use the APP to terminate, wind up, and distribute assets from a bankrupt company’s retirement plan.

The New York State Legislature recently proposed a bill, entitled the Sovereign Debt Stability Act, [1] intended to facilitate sovereign debt restructuring.

As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of many, the LLC is insolvent. See our prior Alert. The disparity of substantive creditor rights depending entirely on corporate form results from two aspects of Delaware law.

There is a growing trend of bankruptcy courts approving structured dismissals of chapter 11 cases following a successful sale of a debtor’s assets under section 363 of the Bankruptcy Code. A structured dismissal is a cost‑effective way for a debtor to exit chapter 11 and is an alternative to (a) confirming a post‑sale liquidating plan, which is expensive and not always viable, or (b) converting the case to chapter 7, which introduces significant uncertainty and unpredictability with the appointment of a chapter 7 trustee to replace management.

The Aldrich Pump Texas Two-Step bankruptcy may have survived dismissal at the bankruptcy court level, but now the asbestos claimants have appealed to the Fourth Circuit following Judge Whitley's approval of their motion for direct appeal.1