The U.S. Court of Appeals for the Sixth Circuit recently held that 11 U.S.C. § 1307(b) requires a bankruptcy court to dismiss a Chapter 13 bankruptcy petition upon a debtor’s request, even if the debtor filed his or her petition in bad faith.

A copy of the opinion in In re Ronald Smith is available at: Link to Opinion.

Many foreign companies experiencing financial distress due to the COVID-19 pandemic have utilized the American bankruptcy system to restructure. In 2020, major airlines in Chile, Colombia and Mexico availed themselves of Chapter 11 protections. The oil and gas sector, already struggling from a multiyear slump in commodity prices that worsened with the pandemic, also saw a surge in Chapter 11 filings by foreign entities.

In the recent case of Jane v Secatore (Liquidator), in the matter of Last Lap Pty Ltd (in liq) [2021] FCAFC 108, the Court heard an appeal of a decision that dismissed an application to discharge summonses issued concerning public examinations by the liquidator of Last Lap Pty Ltd (in liquidation) (Last Lap).

The fact of the Case

The applicant applied to the Court to discharge summonses issued to himself and various entities.

The application was on two main bases:

This week’s TGIF considers the decision of the Supreme Court of NSW in In the matter of Pacific Steelfixing Pty Ltd [2021] NSWSC 655, where a liquidator failed to adequately prove that payments to a creditor, during the relation back period, were voidable transactions because the Liquidator had not finalised investigations into the potential recovery claims available to him.

Key takeaways

In a recent decision, the U.S. Bankruptcy Court for the District of New Jersey denied a debtor’s motion to reject a contract as executory under section 365 of the Bankruptcy Code, holding that the prepetition entry of a court order which required specific performance of a contract rendered the contract non-executory and, therefore, non-rejectable. In re Bennett Enters., Case No. 20-23761 (JNP), 2021 Bankr. LEXIS 625 (Bankr. D.N.J. 2021) (“Bennett Enterprises”).

Background

Am 16.06.2021 wurde von der Bundesregierung der Entwurf der neuen Restrukturierungsordnung (ReO), mit der die RL (EU) 2019/1023 (RestrukturierungsRL) umgesetzt wird, beschlossen (siehe hier).

In two recent rulings, the Bankruptcy Court for the Southern District of New York confirmed that structured dismissals are viable options for debtors to exit bankruptcy notwithstanding the Supreme Court’s Jevic decision.

The temporary restrictions on winding-up petitions brought in under the Corporate Insolvency and Governance Act 2020 (“CIGA”) are wider than originally envisaged when first announced by the government in April 2020 and have now been extended until 30 September 2021.

International Insolvency & Restructuring Report 2021/22 capital markets intelligence Insolvency cover 2021-22.indd 1 29/04/2021 11:12:07 International Insolvency & Restructuring Report 2021/22 The unprecedented financial volatility and operational uncertainty brought about by the COVID-19 pandemic has forced many companies to consider a range of restructuring options in a variety of jurisdictions, either on a proactive basis or as a reaction to creditor pressure.