Despite three recent landmark UK restructuring plan decisions, uncertainty remains around the value, if any, a plan company should offer dissenting creditors as the “deliverability price” of a plan.
Weil's Appellate & Strategic Counseling group welcomes you to Weil's SCOTUS Term Review. Here, we summarize and analyze the cases from the 2023 Supreme Court Term that are most germane to our clients' businesses.
In most bankruptcies, the company decides to file for relief. In involuntary bankruptcies, creditors force the company into bankruptcy. Involuntary petitions are an extreme remedy, and therefore the requirements and standards to meet for filing such petitions are strictly construed and applied. If creditors meet the requirements under the Bankruptcy Code for filing an involuntary petition, it can serve as a powerful tool to use against a debtor.
Key Issues
Actions brought against the BHS directors by the group’s liquidators have resulted in the largest reported award for wrongful trading since the provision’s introduction, but the judgment highlights some unsettled areas of the law relating to directors’ duties.
ACT WHICH ENHANCES PROTECTION FOR EMPLOYEES AFFECTED BY INSOLVENCY NOW LAW
An important decision on the “boundary issue” between arbitration and insolvency came out this week. One that has troubled me in the past.
Question: Can you wind up a company for a debt due under a contract containing an arbitration agreement or do you have to go through arbitration first? Up until now, you had to get an arbitral award first, regardless of whether the debt was disputed.
But now, unless the debt is disputed on genuine and substantial grounds, you can press ahead with applying for a winder. So said the Privy Council today.
Insolvency set-off is an important quasi-security device for parties engaging in trade or other dealings with a company. It enables mutual debts owed between a party and a company to be set off against each other if the company goes into judicial management or liquidation.
A guarantor’s rights of subrogation are provided for in Sections 140 and 141 of the Indian Contract Act, 1872 (“ICA”). These rights allow a guarantor to step into the shoes of the creditor, upon fulfilling the debtor’s payment obligations to the creditor. This means that the guarantor assumes all the rights including the security that the creditor enjoyed against the principal debtor.
Introduction
The Supreme Court’s landmark decision in Harrington v. Purdue Pharma L.P. – holding that the Bankruptcy Code does not authorize the release of third-party claims against non-debtors in a reorganization plan without the consent of the affected claimants – will have a lasting impact on mass tort bankruptcy cases and likely nullifies one of the primary benefits of the so-called “Texas Two-Step” strategy: obtaining third-party releases of the debtor entity’s non-debtor affiliates.