InIn re Juarez, 603 B.R. 610 (9th Cir. BAP 2019), the Bankruptcy Appellate Panel of the U.S. Court of Appeals for the Ninth Circuit addressed a question of first impression in the circuit with respect to property that is exempt from creditor reach: it adopted the view that, under the "new value exception" to the "absolute priority rule," an individual Chapter 11 debtor intending to retain such property need not make a "new value" contribution covering the value of the exemption.
Background
This is a favorable decision for commercial secured lenders. Although the ruling is not controlling on other bankruptcy courts as it is a trial court level ruling, courts may certainly consider it when presented with similar issues.
In In re 1111 Myrtle Avenue Group, LLC (Bankr. S.D.N.Y. 2019), a New York bankruptcy court held that a default interest rate provision of 7 percent was enforceable and not a penalty against a debtor, which retained significant equity postbankruptcy.
Background
In its recent decision in Pars Ram Brothers (Pte) Ltd (in creditors’ voluntary liquidation) v Australian & New Zealand Banking Group Ltd and others [2017] SGHC 38, the Singapore High Court held that the security interests of lenders survived the commingling of assets, and that the assets should be divided among the secured lenders in proportion to their respective contributions.
Facts
The failure of debtors to accurately list and value assets in their bankruptcy schedules is certainly not a new phenomenon. Recently, however, we are witnessing an increase in bankruptcy cases where debtors are using clever and deliberate means to omit assets or disguise the true value of their assets in an attempt to thwart recovery by creditors. While the U.S. trustee's or a creditor's remedy for such bad acts is to seek a denial of the debtor's discharge under 11 U.S.C.
The "American rule" is a well-defined legal principle applied by courts throughout the United States that holds each party to a dispute responsible for paying its own attorney fees. This principle is, however, subject to a number of exceptions that effectively allow a prevailing party to recover its own attorney fees from a losing party. For example, federal and state statutes increasingly authorize a prevailing party to recover costs from its adversary in certain types of actions.
The United States Bankruptcy Appellate Panel of the 6th Circuit affirmed the Bankruptcy Court dismissal of five single – asset real estate Debtors’ Jointly Administered Chapter 11 cases under the “For Cause” dismissal provisions of the United States Bankruptcy Code, 11 U.S.C.A. § 1112 (b). see In re Creekside Senior Apartments, LP, et al., 2013 WL 1188061 (6th Cir. BAP Ky.)
With a growing number of projects facing financial difficulty, the importance of maintaining leverage for securing payment is greater than ever. The project itself remains a prime security target for any contractor, subcontractor or supplier for assuring appropriate attention is given to their claims and that payment will be forthcoming in a timely and unencumbered manner. Some very recent developments in the lien realm emphasize the ongoing attention that is being given to lien statutes and the opportunity they provide for maximizing those considerations of security and leverage.
In the construction sector solid cash flow throughout the supply chain is the lifeblood of most projects, no matter what size, and is arguably the single most important factor in ensuring that a project reaches its conclusion. However, the cumulative effect of various other factors such as Brexit, escalating global energy prices, the outlawing from 1 April 2022 of the use of the red diesel usage for construction plant, super inflation, higher material and labour costs and the end of government COVID-19 support schemes has led to increased lending costs and smaller profit margins.
The new Corporate Insolvency and Governance Bill will introduce new provisions to protect a company from suppliers wishing to terminate supply contracts or invoking more draconian terms when the company is entering into certain insolvency procedures, a CVA, or a new restructuring plan or moratorium (as introduced by the Bill), (each an “Insolvency Procedure”).
The purpose behind the new provisions is to maximise the possibility of a company being rescued or being able to sell its business as a going concern by helping it to trade through an Insolvency Procedure.
The Revel decision provides a cautionary tale for purchasers under Section 363.