Judge Parker of the U.S. Bankruptcy Court for the Western District of Texas recently issued an order in the case of Hilltop SPV, LLC, granting debtor Hilltop SPV LLC’s (“Hilltop”) motion to reject a Gas Gathering Agreement (“GGA”) with counter-party Monarch Midstream, LLC (“Monarch”).[1] This decision allows Hilltop to reject the GGA while allowing Monarch to retain the covenants that run with the land post-rejection.

Harrington v. Purdue Pharma L.P., 144 S. Ct. 2017 (June 27, 2024)

In most bankruptcies, the company decides to file for relief. In involuntary bankruptcies, creditors force the company into bankruptcy. Involuntary petitions are an extreme remedy, and therefore the requirements and standards to meet for filing such petitions are strictly construed and applied. If creditors meet the requirements under the Bankruptcy Code for filing an involuntary petition, it can serve as a powerful tool to use against a debtor.

Key Issues

The opening of safeguard or reorganisation proceedings does not automatically terminate a current agreement notwithstanding any contractual clause providing for termination.

Termination by a lessor

The liquidator of UKCloud Ltd (the Company) applied to the court for directions as to whether a debenture granted by the Company created a fixed or floating charge over certain internet protocol (IP) addresses. The lender argued that it had a fixed charge.

Fixed or floating?

Background

The administrators of Toogood International Transport and Agricultural Services Ltd (in administration) issued an application seeking an extension of the administration. Their application also asked the court whether consent to a previous administration extension should have been obtained from a secured creditor which had been paid in full before the extension process.

Once a creditor, always a creditor?

The German Federal Court of Justice (Bundesgerichtshof) has clarified the conditions under which incongruent collateral, granted when an insolvency is imminent, can be contested. The burden of proof is placed on the defendant creditor to demonstrate that the action was part of a serious restructuring attempt.

Background

Unlike traditional Chapter 11 bankruptcy cases, sometimes called "free fall" cases, where a debtor files for bankruptcy and determines its path out of bankruptcy over the course of the following months, some debtors enter into bankruptcy with a plan entirely (or mostly) drafted, with an emergence strategy already completed. In these cases, debtors enter bankruptcy with pre-packaged plans or pre-negotiated plans (sometimes called pre-arranged plans) ready to file on or just after their petition date.

In a bankruptcy case, a preference action1 is often asserted pursuant to Section 547 of the Bankruptcy Code against a creditor to claw back funds paid to the creditor in the 90 days prior to the bankruptcy. While the most common defenses to a preference action are the ordinary course of business defense2, the new value defense3, and the contemporaneous exchange for new value defense4, there are other defenses that a savvy creditor should consider to reduce or even eliminate preference liability.

Key Issues

In a recent judgment, the Polish Supreme Court resolved an important question concerning the rights of a creditor to bring legal proceedings after the initiation of bankruptcy proceedings by a debtor.

Legal issue

The Supreme Court considered whether the declaration of a debtor's bankruptcy results in the loss of a creditor's standing to bring a lawsuit to declare a debtor’s attempt to dissipate its assets ineffective (actio pauliana).

What is actio pauliana?