On November 16, 2021, Riverbed Technology, Inc., an information technology company headquartered in San Francisco, along with various affiliates, filed a petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware (Case No. 21-11503). The company reports $1 billion to $10 billion in both assets and liabilities.

Overview

In Hilal K. Homaidan v. Sallie Mae, Inc., Navient Solutions, LLC, Navient Credit Finance Corporation, Case No. 20-1981 (2d Cir. 2021), the Second Circuit affirmed the opinion of the U.S. Bankruptcy Court for the Eastern District of New York, which held that private student loans are not excepted from discharge under Section 523(a)(8)(A)(ii) of the Bankruptcy Code, which excepts from discharge “an obligation to repay funds received as an educational benefit, scholarship, or stipend.” 11 U.S.C. § 523(a)(8)(A)(ii).

Background

It is well recognized that, in keeping with the "fresh start" or "rehabilitative" policy, the Bankruptcy Code invalidates after-acquired property clauses in prepetition security agreements, but also includes an exception to the general rule for prepetition liens on the proceeds, products, offspring, or profits of prepetition collateral. Less well understood is that there is an "exception to the exception" if a bankruptcy court determines that the "equities of the case" suggest that property acquired by the estate should be free of such liens.

INTRODUCTION

This newsletter covers key updates about developments in the Insolvency Law during the month of October 2021.

We have summarized the key judgments passed by the Supreme Court of India (SC), National Company Law Appellate Tribunal (NCLAT), the National Company Law Tribunals (NCLT) and the amendments in the Insolvency and Bankruptcy Code, 2016 (Code) by the Government of India. Please see below the summary of the relevant regulatory developments.

In FCA v Carillion [2021] EWCH 2871 (Ch), the High Court has confirmed that Financial Conduct Authority (FCA) enforcement action against Carillion Plc (in Liquidation) (Carillion) pursuant to certain provisions of the Financial Services and Markets Act 2000 (FSMA) does not constitute an “action or proceeding” and therefore falls outside of the scope of the statutory stay imposed by section 130(2) of the Insolvency Act 1986 (the Act).

Section 130(2) of the Act

In In re Bernard L. Madoff Investment Securities LLC, 12 F.4th 171 (2d Cir. 2021), the U.S. Court of Appeals for the Second Circuit revived litigation filed by the trustee administering the assets of defunct investment firm Bernard L. Madoff Inv. Sec. LLC ("MIS") seeking to recover hundreds of millions of dollars in allegedly fraudulent transfers made to former MIS customers and certain other defendants as part of the Madoff Ponzi scheme.

Il D.L. 24 agosto 2021 n. 118 (Decreto Crisi d’Impresa) è ora legge: il 23 ottobre 2021 è stata pubblicata in Gazzetta Ufficiale la L. 147/2021 di conversione del D.L.

With the confirmation of Carlson Travel’s plan of reorganization within 24 hours from the company’s filing, expedited confirmations took another step toward normalization. Carlson Travel (better known as Carlson Wagonlit Travel) together with 37 affiliated entities filed bankruptcy in the Southern District of Texas (Houston Division) on the evening of Thursday, November 11, 2021. The debtors managed to schedule a joint hearing on the approval of their disclosure statement and confirmation of their prepackaged plan for Friday morning, the next day.

The Bankruptcy Protector

In the aftermath of 2017’s Hurricane Irma, wide swaths of Florida lost power. At The Rehabilitation Center at Hollywood Hills, 12 elderly patients succumbed to the heat when the skilled nursing facility’s air conditioning system failed following the electrical outage. In response, Florida’s legislature passed a law requiring all nursing homes and assisted living facilities to have backup generators capable of maintaining cool temperatures.

Whether the pre-Bankruptcy Code "solvent debtor exception" requiring the payment of postpetition interest to dissenting unsecured creditors under a chapter 11 plan survived the enactment of the Bankruptcy Code in 1978 has been the subject of a handful of recent court rulings. This is, perhaps, most notably true of the chapter 11 case of Ultra Petroleum Corp. in connection with a protracted battle over the debtor's obligation to pay make-whole premiums to unsecured noteholders.