On 27 May 2024, the draft bill on transfer of undertaking in bankruptcy (in Dutch: Wetsvoorstel overgang van onderneming in faillissement, the WOVOF) was made available for internet consultation. The WOVOF aims to increase the protection of employees in case of bankruptcy, and more particular, in case of a restart (in Dutch: doorstart). The WOVOF introduces, amongst other things, an obligation for the acquirer in a restart to (in principle) offer employment to all employees from the bankrupt company. This and other measures will be discussed in detail in this this news blog. 

Seven years after the British Home Stores Group Limited, a well known high street retailer, and its operating subsidiaries entered liquidation, the High Court has found two former directors liable for wrongful trading and misfeasance.

Background

The US Supreme Court ruled in a landmark 5-4 decision on June 27, 2024 that nonconsensual third-party releases, as proposed in Purdue Pharma’s bankruptcy plan, were not permissible under the Bankruptcy Code. A nonconsensual third-party release serves to eliminate the direct claims of third parties against nondebtor parties without soliciting the consent of such affected claimants. This contrasts with consensual releases and opt-in or opt-out mechanisms permitted by courts.

In Harrington v. Purdue Pharma LP, in a 5-4 decision, the Supreme Court held that the Bankruptcy Code does not authorize bankruptcy courts to confirm a Chapter 11 bankruptcy plan that discharges creditors’ claims against third parties without the consent of the affected claimants. The decision rejects the bankruptcy plan of Purdue Pharma, which had released members of the Sackler family from liability for their role in the opioid crisis. Justice Gorsuch wrote the majority decision. Justice Kavanaugh dissented, joined by Chief Justice Roberts and Justices Kagan and Sotomayor.

1. Introducción

Este mes son prominentes los autos de homologación de planes de restructuración (en su mayoría no consensuales) que seguimos viendo. En ese mismo campo destacamos la desestimación de la impugnación del ya famoso plan de Torrejón Salud (plan con una única clase) que se ha instaurado como un "leading case" en la práctica. Los recurrentes son condenados en costas.

Todo esto y más resúmenes de resoluciones que nos han parecido interesantes a continuación.

2. Audiencias Provinciales

Background

The Times revealed in an article last month that, according to a report from the Audit Reform Lab, a think tank at the University of Sheffield, only a quarter of the 250 largest companies listed on the London Stock Exchange to become insolvent between 2010 and 2022 had a “going concern” warning included by their auditors in what would turn out to be their final set of accounts. Of those companies 38 also declared a dividend in those accounts.

On 1 July 2024, the Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 was commenced in full and is now law.

Releases of Sackler Family Too Broad and Not Authorized by the Bankruptcy Code

SUMMARY

In In re Flatbush Rho Mezz LLC, the U.S. Bankruptcy Court for the Southern District of New York allowed a secured creditor to be paid the entirety of a $5 million bond based on a loan with 24% default rate interest that continued to accrue interest during the pendency of an appeal.

Background of the Dispute

One of the three debtors, 85 Flatbush RHO Mezz LLC ("Mezz"), acquired a mixed-use property “with a hotel component” in Brooklyn, New York.

Restructuring Corporate Groups: Transferring Employees under a Scheme

Intersnack Mid Co Pty Ltd(No. 2) [2024] NSWSC 9 ("Intersnack")

Restructuring or consolidating corporate groups may involve a new or different company in the group employing staff. In such a case an order can be made under s 413, Corporations Act ("CA") giving effect to that arrangement including where the staff are employed under an enterprise agreement.