Businesses are still struggling to recover post-Covid, with corporate insolvency figures continuing to rise. Recent research shows that the most common company insolvency procedure is creditors’ voluntary liquidation (CVL) and in March 2023, there was the highest monthly total of CVLs since January 2019.

The sectors that appear to have been hit the hardest are construction; wholesale and retail; accommodation and food services.

In Reel Action Sports Fishing Pty Ltd v Marine Engineering Consultants Pty Ltd, [1] the Court offered a timely warning to liquidators of the dangers of adopting and acting on an incorrect understanding of the ownership of contested property. The Court ordered damages against the liquidator personally, despite his position as agent for the company in liquidation.

Background

In a decision likely to be welcomed by both debtors and lenders, the High Court has held that a charge granted by Avanti Communications Limited (“Avanti”) was properly characterised as a fixed charge (rather than a floating charge) notwithstanding that the chargor retained an element of control over the charged assets. A key plank of the decision was that the relevant assets were not ‘fluctuating assets’ or ‘stock in trade’ that the chargor might be expected to dispose of in the ordinary course of its business.

The Hong Kong Court of Final Appeal (CFA) has confirmed a Court of Appeal finding that the court should respect the effect of an exclusive jurisdiction clause in bankruptcy proceedings, just as it does in ordinary civil actions.

Die Giesserei Schmidt GmbH & Co. KG kann den Betrieb fortsetzen. Für den Cuxhavener Traditionsbetrieb wurde ein Investor gefunden, der den Betrieb vollständig und unter Erhaltung aller 57 Arbeitsplätze übernimmt. Zugleich übernimmt der bisherige Betriebsleiter Peter Heinze die Geschäftsführung.

Bei dem Investor handelt es sich um Jens Jäger, der über eine umfangreiche Erfahrung in der Sanierung von Unternehmen verfügt. Jäger sieht erhebliches Potential in beiden Gießereistandorten und plant umfangreiche Investitionen sowie Neueinstellungen.

The foundry Schmidt GmbH & Co. KG can continue operations. An investor has been found for the traditional Cuxhaven-based company, who will take over the business in its entirety while retaining all 57 jobs. At the same time, the previous plant manager Peter Heinze will take over the management.

The investor is Jens Jäger, who has extensive experience in turning around companies. Jäger sees considerable potential in both foundry sites and plans extensive investments as well as new hires.

Introduction

Section 363(m) of the Bankruptcy Code is one of the most important and well-known statutes to bankruptcy practitioners. This section of the Bankruptcy Code protects a good faith asset purchaser who purchases assets from a debtor’s bankruptcy estate from having the sale unwound when the sale (or an aspect of the sale) is challenged by an appeal.

“within three (3) business days of termination of the mediation, the Debtors shall publicly disclose the terms of the last offers extended by each of the Mediation Parties, respectively.”[Fn. 1]

Say what!?

Whoever heard of such a thing—a requirement that the “last offers” of the mediating parties be publicly disclosed?

And this requirement is in a “consensual” mediation order entered in the Genesis Global Holdco, LLC, bankruptcy.[Fn. 2]

Context

Here’s the context.[Fn. 3]

On April 17, 2023, the Fifth Circuit Court of Appeals, in Matter of RE Palm Springs II, L.L.C., 2023 WL 2966520 (5th Cir. April 17, 2023), held that a senior lender who uses economic leverage and asserts its legal rights to squeeze out a junior lender remains a good faith purchaser entitled to declare an appeal moot based on a sale under section 363(m) of the Bankruptcy Code. Key to the Fifth Circuit’s opinion was the fact that the actions in question were disclosed to the bankruptcy court in advance of it making the section 363(m) finding.

Facts