Debtor in possession financing in the US has continued to rise, particularly in the context of retail insolvencies. In Australia, we have seen a number of high profile retail collapses in recent years. Can DIP financing solve the woes of struggling retailers in Australia?
Frank Grell is a partner at Latham & Watkins who chairs the firm’s German Restructuring and Insolvency Practice. Grell reflects on some of the major changes brought about by Germany’s 2012 Insolvency Act (Insolvenzordnung), including an increase in the rights of creditors in the proceedings over the assets of German companies, the introduction of “protective shield” proceedings and a reduction in the negative stigma previously associated with restructuring and insolvency.
Introduction
In a case of first impression, In re Qimonda AG, the Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”) found that the protections of section 365(n) of the Bankruptcy Code are available to licensees of U.S. patents in a chapter 15 case even when these protections are not available under the foreign law applicable to the foreign debtor.
In its April 2018 decision, the BGH ruled on the question whether the directors of a company that has been granted debtor in possession status by the respective insolvency court can become personally liable for a breach of a duty of care vis-à-vis the creditors like an insolvency administrator. The underlying legal question was the subject of a controversial academic discussion in the past.
On the bill of the Federal German Government for an Act Serving the Further Facilitation of the Reorganization of Enterprises (ESUG)
Court Acceptance of Petition for Corporate Reorganization
In a recent ruling likely to be of great interest to debtors and creditors alike, the United States District Court for the Northern District of Georgia (the “Court”) ruled in MC Asset Recovery v. Southern Company1 (the “Southern Co. Litigation”) that fraudulent transfer claims held by a bankruptcy trustee or debtor in possession under the Bankruptcy Code continue to be viable at the conclusion of a bankruptcy case, even if all creditors’ claims have already been satisfied in full pursuant to a plan of reorganization.
Although it may be difficult to define precisely what an “executory contract” is (with the Bankruptcy Code providing no definition), I think most bankruptcy lawyers feel how the late Supreme Court Justice Potter Stewart famously felt about obscenity--we know one when we see it. Determining that a patent license was executory in the first place was an issue in the Fifth Circuit’s recent decision in RPD Holdings, L.L.C. v.
The Chancellor’s Budget Report on 22 April included the following statement:
‘The Government will work to ensure that the regulations and procedures for dealing with troubled companies work to facilitate company rescues whenever they are appropriate, that the maximum economic value is rescued from companies that get into difficulties, and that the knock-on effects of company insolvencies on their creditors are minimised. Budget 2009 announces that the Insolvency Service will consult on: