Every now and then we get a bankruptcy opinion declaring a rule with broad application that, (i) may make sense is specific situations, but (ii) is a terrible result for others.
Here’s an Exhibit A opinion for such a proposition: Reinhart Foodservice LLC v. Schlundt, Case No. 21-cv-1027 in the U.S. District Court for Eastern Wisconsin, (Doc. 12, issued October 27, 2022).
The Facts
Background
Under Dutch law, the directors of a (private) company can be held personally liable by the trustee for the bankruptcy deficit. Liability can arise when the directors have manifestly performed their management duties improperly and if it is reasonable to assume that bankruptcy was declared as a result. Section 2:248(4) of the Dutch Civil Code (DCC) contains a list of grounds for reducing the amount of the directors’ liability.
Decision
On 4th May 2021 the government introduced some new legislation, which seeks to help households cope with debt, entitled The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England & Wales) Regulations 2020.
The Regulations apply to debtors who reside or are domiciled in England and Wales, and largely to personal debts. Some business debts are eligible but not if they relate solely to the business and the debtor is VAT registered, or if the debtor is in partnership with someone else.
Re Bitumina Industries Ltd (in administration); Manning and another v Neste AB and another [2022].
This was an application by joint administrators for directions on the validity of a floating charge granted to a connected party at a 'relevant time' and seemingly invalid under s245 of the Insolvency Act 1986 (the Act).
Background
On October 14, 2022, the U.S. Court of Appeals for the Fifth Circuit issued a long-awaited ruling on whether Ultra Petroleum Corp.
Will 2023 be a year of administrations?
In our last article, we discussed the prospect of 2022 being a year defined by inflation – a point that was only heightened by a weekend of tepid Black Friday sales for retailers.
David Pollard has been looking at the statutory provisions dealing with substantial disposals by a company in administration in the first 8 weeks of the administration. When is a potential purchaser a connected person under the new provisions that come into force at the end of April 2021? The new legislation was the Administration (restrictions on Disposals etc to Connected Persons Regulations 2021 and para 60A in Schedule B1 to the Insolvency Act 1986.
The ability of a bankruptcy trustee or chapter 11 debtor-in-possession to sell assets of the bankruptcy estate "free and clear" of "any interest in property" asserted by a non-debtor is an important tool designed to maximize the value of the estate for the benefit of all stakeholders. The U.S. Bankruptcy Court for the Southern District of Illinois recently examined whether such interests include "successor liability" claims that might otherwise be asserted against the purchaser of a debtor's assets. In In re Norrenberns Foods, Inc., 642 B.R. 825 (Bankr. S.D. Ill.
Last month, Judge Caproni of the Southern District of New York issued a ruling stating that if a commercial lease does not require a landlord to hold a security deposit in trust and if there is no state statute generally requiring landlords to do so, the security deposit may not be recoverable by the tenant when the landlord files for bankruptcy. See 10FN Inc. v. Cerberus Business Finance LLC, 21-5996 (S.D.N.Y. Oct. 18, 2022).
In Gulfport Energy Corp. v. FERC, 41 F.4th 667 (5th Cir. 2022), the U.S. Court of Appeals for the Fifth Circuit tripled down on its nearly two-decades-long view that filed-rate contracts regulated under the National Gas Act (the "NGA") and the Federal Power Act (the "FPA") can be rejected in bankruptcy without the consent of the Federal Energy Regulatory Commission ("FERC"). Reaffirming its previous rulings in In re Mirant Corp., 378 F.3d 511 (5th Cir. 2004), and In re Ultra Petroleum Corp., 28 F.4th 629 (5th Cir.