In the recent opinion In re PT Bakrie Telecom TBK, 2021 WL 1439953, the Bankruptcy Court for the Southern District of New York provided some further guidance on what constitutes a “collective proceeding” for purposes of achieving recognition of a foreign proceeding under Chapter 15 of the Bankruptcy Code. This post will address the collective nature of the proceeding at issue. In a future post we will address other important elements of Judge Lane’s decision.

In HighPoint Resources Corporation, Case No. 21-10565-CSS (Bankr. D. Del. 2021), the U.S. Trustee’s office filed an objection (Dkt. No. 48) to the rapid confirmation of the Debtors’ plan of reorganization, among other things, indicating its concern regarding the recent trend of expedited pre-packaged plans because of their failure to provide interested parties with adequate notice.

Expedited Pre-Packs

Early evening on February 23, 2021, Belk Inc. and its affiliates (collectively, “Belk”) filed their Chapter 11 bankruptcy petitions in the Bankruptcy Court for the Southern District of Texas. Less than seventeen hours later, Judge Marvin Isgur confirmed Belk’s pre-packed plan of reorganization. Belk is not the first Chapter 11 bankruptcy case to accomplish plan confirmation within the first twenty-four hours after filing a petition, and it certainly won’t be the last. In 2019, Sungard Availability Services Capital, Inc.

Alerts and Updates

The Court’s decision provides greater certainty for creditors who passively retain estate property that they obtained pre-petition.

In In re Palladino, 942 F.3d 55 (1st Cir. 2019), the U.S. Court of Appeals for the First Circuit addressed whether a debtor receives “reasonably equivalent value” in exchange for paying his adult child’s college tuition. The Palladino court answered this question in the negative, thereby contributing to the growing circuit split regarding the avoidability of debtors’ college tuition payments for their adult children as constructively fraudulent transfers.

Background

Wrongful Trading

On 14 May 2020, the UK Government extended the temporary suspension of wrongful trading liability until 30 June 2020.

Parts I and II in this series discussed certain of the statutory predicates of credit bidding and some considerations for structuring such a bid. Here in Part III, we will address some additional issues that a lender must take into account when deciding to credit bid its debt and some documentary considerations. As its name implies, the predominant form of consideration in a credit bid is often the lender’s debt. Lenders, however, cannot ignore another component of consideration often needed to consummate a transaction, cash.

In Part I of this three part series we noted the likelihood that credit bidding will be more prevalent in today’s unpredictable economic environment and discussed some of the statutory backdrop. Here, in Part II, we will discuss certain mechanics that are associated with making, and later consummating, a credit bid.

For many secured lenders, the concept of credit bidding in bankruptcy is generally understood yet infrequently explored in practice. In today’s extremely uncertain economic environment, third-party alternatives may not present themselves as M&A activity and acquisition financing have slowed significantly with the spread of COVID-19. As a result, credit bidding could gain momentum as lenders look for self-help alternatives to maximize their recoveries.

Due to the COVID-19 pandemic, Mexican courts were closed for the past few months and only received urgent cases.

The COVID-19 pandemic has had a negative impact on the Mexican economy. As a result, Mexican courts have seen a rise in insolvency cases, which are not as common in Mexico compared to other jurisdictions, such as the United States. The rise of insolvency cases imposes new challenges to Mexican courts and Mexico’s laws.