On January 17, 2014, Chief Judge Kevin Gross of the Bankruptcy Court for the District of Delaware issued a decision  limiting the right of a holder of a secured claim to credit bid at a bankruptcy sale. In re Fisker Auto. Holdings, Inc.,  Case No. 13-13087-KG, 2014 WL 210593 (Bankr. D. Del. Jan. 17, 2014). Fisker raises significant issues for lenders who  are interested in selling their secured debt and for parties who buy secured debt with the goal of using the debt to  acquire the borrower’s assets through a credit bid.

Editor’s Note: This is a new one for us at The Bankruptcy Cave. We are starting a series of primers, covering a narrow range of law but with more depth than just “here’s a recent case.” And also, we have our first edition of “The Bankruptcy Cave Embedded Briefs” – top quality briefs on a certain issue, feel free to download to your own form files or come back and grab ’em when you need ’em. Let us know what you think – we are always trying to improve things around here for our readers.

One of the ironic issues for failing banks has been the fact that banks that they have had to continue to deal with their borrowers and depositors in the ordinary course of business even though they are already in the queue for resolution by the FDIC. So for example, loans continue to get renewed and documents executed. What happens if you renew a loan shortly before the bank fails, do you have some sort of defense to enforcement of the loan when the successor bank or the FDIC makes demand on you?

In But Ka Chon v Interactive Brokers LLC [2019] HKCA 873, the Hong Kong Court of Appeal upheld a lower court's decision to reject an application to set aside a statutory demand. The appellant had argued (among other things) that an arbitration clause in his agreement with the respondent required their dispute to be referred to arbitration.

The global crisis and the rights of foreign creditors of Sovereign States

The global financial crisis has been well documented in the press, with one recent headline in The Times reading “Like Iceland, Ireland can refuse to pay up”. Claims that States face bankruptcy not unnaturally raise the alarm bells for the financial markets. Can States be sued if they default in payment? RPC recently enforced a claim against assets of an EU State, as discussed below...

Bankrupt States: A misnomer

The case of Poulton v Ministry of Justice was decided by the Court of Appeal at the end of last month. The Court decided that a trustee in bankruptcy was left without a remedy against the Court Service when a bankrupt's estate suffered loss following an oversight by the Court Service to notify the Land Registry that a bankruptcy petition had been presented (as it is required to do by rule 6.13 of the Insolvency Rules 1986).

The background

• Consultation ends September 7 2009
• Likely to re-ignite controversy over 'pre-pack' administrations

New proposals by the Government to improve access to rescue finance for small companies would allow larger or complex businesses to make private applications to the courts for an "administration-type" regime without creditors necessarily knowing. Proposals in the same consultation on lending to insolvent companies could drive up the cost of borrowing, says Reynolds Porter Chamberlain LLP (RPC), the City law firm.

In a judgment useful to insolvency practitioners, a court has recently confirmed that liquidators are not personally liable for payment of dividends. In Lomax Leisure v Miller and Bramston [2007] EWHC 2508 (Ch) Miller and Bramston faced personal claims on dividend cheques they had cancelled, after receiving a pending application from a creditor whose claim they had rejected. Miller and Bramstom were later replaced by a new liquidator who brought claims in the name of the company and various creditors.

With growing competition and global market uncertainties in recent years, businesses may experience operational and financial challenges, resulting in debt defaults. A creditor is entitled to petition for the bankruptcy and liquidate the debtor’s assets in order to try to achieve a maximum recovery. Statistics published by the Official Receiver’s Office noted 7,062 petitions for compulsory liquidation and bankruptcy between January and October 2019. In this client alert, we discuss two significant and recent judgments in respect of insolvency law given by the Hong Kong* courts.

Proposed changes in Italian law mean that it should become easier to create certain types of security in Italy and to recover debt. The relevant law is Decree-law no. 59/2016 (“Urgent provisions on insolvency and executive procedures’’) which came into force on 4 May 2016 and which should be converted into binding law by early July.

The main changes introduced by the Decree are as follows: