The Court of Session has confirmed that the administration in Scotland of a Scottish company will take priority over an Indian liquidation of the same company, regardless of where the company’s business and assets are situated. The Court has also confirmed that the validity and enforceability outside the UK of a floating charge is irrelevant to the validity of an administrator’s appointment in Scotland under that floating charge.
Recent cases we have been involved in have highlighted the need for Insolvency Practitioners to pay careful attention to the effect that block transfer orders have on administrations where the exit route is a creditors' voluntary liquidation ("CVL"). Failure to do so could risk the appointment of liquidators being invalid.
The statutory requirements
Under the insolvency legislation, any dispositions of property or payments made by a company after it has been presented with a winding up petition are void, unless validated by the Court.
The case of Burnden Holdings (UK) Limited (in liquidation) v (1) Gary John Fielding (2) Sally Anne Fielding [2016] determined whether a claim in respect of breach of duty against two directors of Burnden Holdings (UK) Limited (Burnden) was time-barred. The alleged breach of duty was in connection with a distribution in specie. The Court of Appeal overturned the High Court’s decision and held that section 21 of the Limitation Act 1980 (LA 1980) applied so that the claim was not subject to the usual period of limitation.
The presumption that courts normally validate dispositions by a company subject to a winding up petition if such dispositions are made in good faith and in the ordinary course of business has been called into question in the recent case of Express Electrical Distributors Ltd v Beavis and others [2016].
The recent case of In re Tousa, Inc. (Official Committee of Unsecured Creditors of Tousa, Inc., v. Citicorp North America, Inc., Adv. Pro. No. 08-1435-JKO (Bankr. S.D. Fla., October 13, 2009)) has attracted considerable attention – and dread – in the banking and legal communities.
The U.S. Court of Appeals for the Third Circuit, in In re Philadelphia Newspapers LLC,1 has ruled that secured creditors do not have a right, as a matter of law, to credit bid their claims when their collateral is sold under a plan of reorganization. The Third Circuit held that secured creditors may be barred from credit bidding where a debtor's reorganization plan provides secured creditors with the "indubitable equivalent" of their secured interest in the assets. The court's ruling follows a similar ruling last year by the U.S.
One's Crisis is Another's Opportunity: Section 363 Sales With the increasing numbers of companies which were once thought to be giants of industry filing for bankruptcy, more opportunities to purchase major assets are becoming available to savvy buyers looking to expand their business or asset base. The Bankruptcy Code provides debtors with the ability to liquidate all or a part of their assets through court-supervised sales and buyers with the ability to obtain those assets at more favorable prices than they would pay if the sale were consummated outside of a bankruptcy.
Chapter 15 of the Bankruptcy Code permits a foreign representative of a foreign insolvency proceeding to seek a bankruptcy court’s assistance in an ancillary proceeding upon recognition of the foreign proceeding. Upon recognition, Chapter 15 empowers a bankruptcy court to grant broad relief to a foreign representative to protect the assets of the debtor or the interests of its creditors in the United States.
On April 7, 2010, the Florida Office of Insurance Regulation declared Northern Capital Insurance Company, a Florida-based property insurer, to be “insolvent and in hazardous financial condition.” The company had been under the administrative supervision of the Office of Insurance Regulation since May 29, 2009. The company is expected to be placed into receivership and all of its policies are expected to be cancelled shortly after the entry of an order of liquidation.