There are few things as daunting to a vendor or supplier as its counterparty’s bankruptcy. The likelihood of a significantly discounted recovery for goods and services provided and potential loss of a customer may have long-lasted impacts on profitability. Even worse, however, is the prospect that payments received in good faith prior to a debtor’s bankruptcy filing may be at risk of recoupment. In this alert, we address the risk that such payments are voidable as preferential transfers.
On 19 July 2023, the Luxembourg parliament passed bill no. 6539A on business preservation and modernisation of bankruptcy law, which aims to modernise Luxembourg’s insolvency laws, implementing EU Directive 2019/1023 of the European Parliament and the Council of 20 June 2019 on preventive restructuring frameworks (the 'Business Preservation and Insolvency Modernisation Act' or 'BPIM Act').
If bankruptcy proceedings are commenced against a debtor or if a debtor enters into a court-approved composition agreement with an assignment of all of its assets, transactions executed by the debtor during the last five years are subject to scrutiny.
The purpose of claw back claims is to recover assets extracted from or given away by an insolvent debtor for the benefit of its insolvency estate and ultimately its creditors. Transactions may be subject to claw back actions if:
Bill n°7989 amending the law of September 2, 2011 regulating access to the professions of craftsman, trader, industrialist and certain liberal professions (the “2011 Law”), was adopted yesterday, 20 July 2023, by the Luxembourg Parliament. The dispense with the second vote shall be approved by the State Council in the coming days.
The reform modernizes the right of establishment in the Grand Duchy of Luxembourg in order to create a modern legal framework that will stimulate entrepreneurship.
On July 14, the U.S. Court of Appeals for the Ninth Circuit partially affirmed and partially reversed a district court’s dismissal of an FDCPA suit. The district court reviewed plaintiff’s claims under the FDCPA, which alleged that defendants violated the bankruptcy court’s order discharging his debt and knowingly filed a baseless debt collection lawsuit.
HopgoodGanim Lawyers recently acted for R.W Pascoe Pty Ltd in successfully setting aside the deed of company arrangement (DOCA) proposed by Crimson Fresh Produce Pty Ltd.
The underestimated danger of personal liability
Just as "The Seven Deadly Sins" according to historian Sebastian Haffner (1964) led to the downfall of the German Empire in 1918, there are seven deadly sins for the management of a GmbH, GmbH & Co. KG or stock corporation in connection with crisis and insolvency. Although these do not result in the fall of an empire, they do result in the personal liability of the management. Moreover, that often leads to the destruction of the economic existence.
Misled or defrauded shareholders may rank equally with creditors in liquidations of insolvent funds
KEY POINTS
In a significant order passed on June 28, 2023, in the case of Ronak Industries vs.