The Law on Bankruptcy 2014 (“New Law”) was officially approved at the 7th session of the XIII National Assembly.

The New Law expands its scope by clearly providing provisions on orders, application procedures and handling and opening of bankruptcy procedures; determination of property obligations and measures to preserve property in bankruptcy procedures; conditions and procedures for restoration of business operation, procedures for property liquidation and bankruptcy declaration and execution of judges’ decisions on bankruptcy.

Vietnamnews

In brief: Vietnam's new Law on Bankruptcy will take effect from 1 January 2015, bringing in a number of changes, including a new definition of 'bankruptcy'. Partner Robert Fish (view CV)and Junior Associates Giang Quang Nguyen and Linh Nguyen look at the most significant features of the new law and note what will differ from the current regime.

Delaware companies take note: a state court has ruled that companies in apparent good financial health may not use the bankruptcy process to avoid shareholder approval of an asset sale—even in situations in which a shareholder vote may be difficult to obtain.

A business consultant who contracted to receive a percentage of a company’s shares in exchange for helping the company go public—but never actually received those shares and obtained a money judgment against the company instead—was not a holder of equity for purposes of subordination under the Bankruptcy Code, the U.S. Court of Appeals for the Ninth Circuit has determined.

The U.S. Court of Appeals for the Sixth Circuit has held that as the assignee of a debtors’ mortgage loan, a bank’s security interest was superior to the Chapter 13 Trustee’s interest as a judicial lien creditor. The ruling in Rogan v. Bank One, National Association (In re Cook), 457 F.3d 561 (6th Cir. 2006) affirmed the holdings of two lower courts. In December 2000, the debtors entered into a loan transaction with NCS Mortgage Lending Company (“NCS”), which was secured by a properly recorded mortgage.

Utility Services—Darby v. Time Warner Cable, Inc. (In re Darby), No. 05-20931 (5th Cir., Nov. 14, 2006)

The U.S. Court of Appeals for the Fifth Circuit has held, in an issue of first impression in the circuit, that a cable service provider was not a utility under section 366 of the Bankruptcy Code. Therefore, the cable company was not obligated to provide services to a bankrupt debtor, even though the debtor offered assurances of future payment. The ruling affirmed the holdings of two lower courts.

In a case of first impression, the U.S. Court of Appeals for the Second Circuit has held that a claim for damages based on a chapter 11 debtor’s failure to issue shares of its common stock in exchange for a claimant’s stock in another company pursuant to a termination agreement is subject to mandatory subordination.

In Rombro v. Dufrayne (In re Med Diversified, Inc.), 461 F.3d 251 (2d Cir. 2006), the court held that the claim “arose from” the purchase of the debtor’s stock within the meaning and purpose of the Bankruptcy Code’s subordination provision.

Lender Had Duty To Investigate Claim to Promissory Note

In a harsh decision for the lender, the U.S. Court of Appeals for the Tenth Circuit has determined that a debtor’s loan may be discharged in chapter 7 bankruptcy— despite the borrower’s admission that his personal financial statement contained materially false representations about his financial condition.

A recent bankruptcy court decision in the Southern District of New York may raise concern among brokerage firms who execute and clear brokerage transactions for hedge funds and similar investment vehicles. The bankruptcy trustee of the Manhattan Investment Fund (which the court found to be a Ponzi scheme and whose principal Michael Berger pled guilty to criminal charges) obtained summary judgment against Bear Stearns requiring it to return to the bankruptcy estate all the margin payments the fund had made in the year before it imploded, totaling $141.4 million.