Section 1124(2) of the Bankruptcy Code gives chapter 11 debtors a valuable tool for use in situations where long-term prepetition debt carries a significantly lower interest rate than the rates available at the time of emergence from bankruptcy. Under this section, in a chapter 11 plan, the debtor can "cure" any defaults under the relevant agreement and "reinstate" the maturity date and other terms of the original agreement, thus enabling the debtor to "lock in" a favorable interest rate in a prepetition loan agreement upon bankruptcy emergence.
The October 2023 insolvency statistics show that company insolvencies have risen by 17.6% from October 2022 to October 2023 and by 56.7% since pre-pandemic levels in October 2019. Total insolvencies have reached the highest levels since 2009.
The Court heard argument in the case on December 4, 2023.
Third-Party Releases in Chapter 11 Plans
The English High Court has clarified the test it will apply on an application for a moratorium. A company can get the benefit of a moratorium without applying to court but a court application is necessary if a winding up petition has already been presented or the company is an overseas company.
Background
A debtor's non-exempt assets (and even the debtor's entire business) are commonly sold during the course of a bankruptcy case by the trustee or a chapter 11 debtor-in-possession ("DIP") as a means of augmenting the bankruptcy estate for the benefit of stakeholders or to fund distributions under, or implement, a chapter 9, 11, 12, or 13 plan.
In most cases seeking recognition of a foreign bankruptcy proceeding in the United States under chapter 15 of the Bankruptcy Code, the foreign debtor's "foreign representative" has been appointed by the foreign court or administrative body overseeing the debtor's bankruptcy case.
On 1 November, the Supreme Court issued its judgment in R (on the application of Palmer) v Northern Derbyshire Magistrates Court and Another.
Background
In its much-anticipated 2023 Autumn Statement, the UK Government has committed to extending the relief available to the hospitality, retail and leisure sector. It has also announced that a business rates support package worth £4.3 billion will be available to support small businesses and the high street. However, the hospitality sector remains one of the most vulnerable, and it remains to be seen whether this additional support will be enough.
The Bankruptcy Code does not explicitly authorize the equitable remedy of "substantive consolidation"—i.e., treating the assets and liabilities of two or more related entities as if they belonged to a single, consolidated bankruptcy estate. However, it is well recognized that a bankruptcy court has the authority to order such relief under appropriate circumstances in the exercise of its broad equitable powers when each of the original entities are already debtors subject to the court's jurisdiction.
In the recent case of Dilip B. Jiwrajka v. Union of India (Writ Petition (Civil) No. 1281 of 2021), the Constitutional Bench of the Supreme Court (the “SC”) upheld the constitutionality of Sections 95 to 100 of the Insolvency and Bankruptcy Code, 2016 (“IBC”).