In a recent decision, the Court of Appeals for the Third Circuit closed the door on triangular setoffs, ruling that the mutuality requirement under Section 553 of the Bankruptcy Code must be strictly construed and requires that the debt and claim sought to be setoff must be between the same two parties. In re: Orexigen Therapeutics, Inc., No. 20-1136 (3d. Cir. 2021).
Background
The COVID-19 pandemic has put the rescue of struggling but viable businesses front of the agenda. The initial response of the Belgian government and legislator was a moratorium on enforcement measures and bankruptcy petitions. Such moratorium can however not be a structural solution in the long term, and expired on 31 January 2021.
On 26 March 2021, amendment to the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020 (the Regulations) will come into force.
The purpose of the Regulations is to extend some of the temporary measures introduced by The Corporate Insolvency & Governance Act 2020 (CIGA), to assist companies that are struggling to deal with the ongoing economic ramifications of pandemic-related restrictions.
These Regulations apply across the UK, including Scotland.
As the UK slowly emerges from the second wave of the COVID-19 pandemic, the government has announced the further extension of the duration of certain temporary measures initially introduced pursuant to the Corporate Insolvency and Governance Act 2020 (CIGA).
Brazos Electric Power Cooperative recently filed for Chapter 11 relief in the U.S. Bankruptcy Court for the Southern District of Texas, weeks after the February ice storm severely disrupted Texas’s electricity supply and prices. Brazos filed for bankruptcy in part to shield its member cooperatives and consumers from liability for invoices totaling over $2.1 billion from the Electric Reliability Council of Texas.
Creditors are often faced with the long-term default of a counterparty. One of the options offered by the legislator is to open insolvency proceedings against the debtor, with the help of which the fullest possible fulfillment of obligations can be achieved. Insolvency proceedings of a legal entity are a set of measures, of a legal nature, within the framework of which the claims of creditors are covered by the debtor's assets in order to facilitate the fulfillment of the debtor's obligations.
Cognac Ferrand S.A.S. v. Mystique Brands LLC, No. 20 Civ. 5933 (S.D.N.Y. Jan. 31, 2021) [click for opinion]
In this update, we highlight a selection of key Court decisions which focus on cross-border recognition and assistance, restructuring and schemes of arrangement, the winding-up of foreign companies in Hong Kong and other insolvency-related issues.
This week’s TGIF looks at a recent decision of the Victorian Supreme Court, where a winding up application was adjourned to allow the debtor company to pursue restructuring under the recently introduced small business restructuring reforms.
Key takeaways