Legal nature of a keepwell deed

Keepwell deeds are widely used in offshore financing transactions, but such arrangement has only been tested in the PRC courts in recent years. In this alert, we explore issues relevant to the enforceability of such arrangements in Mainland China.

Good morning.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of July 25, 2022.

Good morning.

Following are this week’s summaries of the decisions released from the Court of Appeal for Ontario for the week of July 25, 2022. The Court was busy before its long weekend including one lengthy substantive case released.

State laws on assignments for benefit of creditors (“ABC”) have been around for a long time. But times have changed over the last half-century. Specifically, the bankruptcy alternative has changed dramatically:

When an enforcement authority issues guidelines to its personnel for making enforcement decisions and makes those guidelines public, all who are subject to that authority should sit-up and take notice.

On June 10, 2022, the U.S. Trustee’s Office, Department of Justice, issues “Guidelines” to its personnel for enforcing rules on “Bifurcated Chapter 7 Fee Agreements.”[Fn. 1]

Here is an internal description on the nature of the guidelines (at 6):

The Bankruptcy Protector

Bankruptcy Basics for New and Non-Bankruptcy Attorneys

This entry is part of Nelson Mullins’s ongoing “Bankruptcy Basics” blog series that is intended to address foundational aspects of bankruptcy for non-bankruptcy practitioners and professionals. This entry will discuss how ipso facto clauses are treated in bankruptcy.

Imagine you are the vendor to an entity that has just filed for protection under chapter 11 of the Bankruptcy Code. Your contract documents include the following default provision:

Voyager Digital Assets, Inc., a leading cryptocurrency brokerage and lending platform, filed for Chapter 11 bankruptcy protection on July 5, 2022 in the Southern District of New York following a recent financial crisis impacting the crypto industry, which investors are calling the “crypto winter.” The filing was followed by the Chapter 11 bankruptcy of Celsius Networks. While the situation is fluid, these two filings could be the beginning of a series of bankruptcies by major cryptocurrency companies.

In a matter of first impression relating to an important bankruptcy claims administration issue, Judge Sean H. Lane of the United States Bankruptcy Court for the Southern District of New York, recently denied the ability of a court appointed claims agent to sell and profit from providing direct access to publicly available claims register information. The unsuccessful purchaser of such information was XClaim Inc. (“Xclaim”), a relatively new venture that is seeking to develop a web-based claims trading platform.

The Eleventh Circuit has held that amounts paid post-petition for an administrative expense claim under Section 503(b)(9) of the Bankruptcy Code do not reduce the “new value” otherwise available to the creditor as a defense to a preference claim. Auriga Polymers Inc. v. PMCM2, LLC, 2022 U.S. App. LEXIS 19761 (11th Cir. July 18, 2022).

I. Introduction

Proceedings against personal guarantors find their origin in Section 128 of the Contract Act, 1872 which deals with the co-extensive liability of a surety. It has long been considered that a surety’s liability to pay the debt is not removed by reason of the creditor’s omission to sue the principal debtor. Such a creditor is not bound to exhaust his remedy against the principal debtor before suing the surety, and a suit may be maintained against the surety even though the principal debtor has not been sued.

There have been several so-called "uptier" transactions over the last several years, where lenders have provided "rescue financing" to a distressed company senior in priority to existing debt. While there has been significant commentary about whether such financings are contractually permitted, there have been few decisions analyzing challenges to such transactions.¹ In Bayside Capital Inc. v. TPC Group Inc.