The Commodity Futures Trading Commission is proposing to amend its Bankruptcy Rules to permit the trustee for a bankrupt futures commission merchant to continue to operate the business of the commodity broker in the ordinary course for a limited period of time.

In a highly-anticipated decision on a long-running bondholder dispute, the US Court of Appeals for the Second Circuit issued its judgment last week in Marblegate Asset Management LLC v Education Management Corp. It concluded that “Section 316(b) [of the US Trust Indenture Act 1939] prohibits only non-consensual amendments to an indenture’s core payment terms”, i.e. the amount of principal and interest owed and the maturity date.

Plenty of ink has been spilled about how to apply the U.S. Supreme Court’s decision in Stern v. Marshall and the line of cases in which it sits. It is a challenging body of law for many reasons, but perhaps the most difficult reason is that the Court indicated that the scope of power that bankruptcy courts may be given today must be defined by reference to beliefs about the scope of judicial and other governmental powers at the time of the country’s founding, when divisions of governmental power were embedded in the U.S. Constitution.

The Supreme Court of Canada’s decision in (Re) Indalex has changed the landscape for both lenders and borrowers in Canada who sponsor registered defined benefit pension plans. For lenders, carefully drafted loan documentation and effective planning can enhance the protection of a secured lender’s position in the face of the broadened scope of a deemed trust applicable to a borrower’s defined benefit pension obligations.

Introduction

Exposure draft legislation has been released which proposes amendments to the GST legislation to make it clear that liquidators and other representatives of incapacitated entities are liable for GST on transactions within the scope of their appointment.

Date of effect

It is proposed that the main operative provisions of the legislation have effect retrospectively from the commencement of the GST Act on 1 July 2000.

Background

Debtor-in-possession financing (“DIP financing”), which is new short-term financing obtained by an insolvent company after the commencement of an insolvency proceeding, is a recurring theme for two primary reasons. First, insolvent companies are generally desperate for an immediate infusion of cash to sustain operations. Second, creditors will usually provide such financing only on a super-priority basis, jumping ahead of existing secured creditors of the insolvent company.