In In re CII Parent, Inc.,1 the Bankruptcy Court for the District of Delaware affirmed a secured lender’s prepetition exercise of its proxy rights and its subsequent removal and replacement of the directors/managers of the debtor’s non-bankrupt subsidiaries, effectively cutting off the debtor’s ability to pursue effective relief in the bankruptcy case.
Relevant Facts
Avanti Communications Limited (Company) appointed administrators to affect a sale. The sale included items under a ‘Relevant Assets’ definition. These items consisted of were a satellite payload, certain equipment used in the operation of network and ground station facilities, certain satellite network filings and certain ground station licences which entitled the company to operate the ground station assets.
In a recent case involving Savannah AG Research Pty Ltd (Savannah), the Federal Court of Australia considered an application for relief by Savannah’s majority shareholder under section 447A(1) or section 447C(2) Corporations Act 2001 (Cth) which alleged that the directors did not hold a genuine opinion Savannah was insolvent or likely to become insolvent and were motivated by an improper purpose.
Oral arguments occur on April 24, 2023, before the U.S. Supreme Court in Lac Du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, Case No 22-227. Here is a link to the oral arguments transcript.
What follows is an attempt to, (i) summarize the facts and issue in the case, and (ii) provide a sampling of questions and comments from the justices during oral arguments.
Facts
Here’s what happened:
The Hong Kong Court of Final Appeal (CFA) has confirmed a Court of Appeal finding that the court should respect the effect of an exclusive jurisdiction clause in bankruptcy proceedings, just as it does in ordinary civil actions.
Introduction
Section 363(m) of the Bankruptcy Code is one of the most important and well-known statutes to bankruptcy practitioners. This section of the Bankruptcy Code protects a good faith asset purchaser who purchases assets from a debtor’s bankruptcy estate from having the sale unwound when the sale (or an aspect of the sale) is challenged by an appeal.
On April 17, 2023, the Fifth Circuit Court of Appeals, in Matter of RE Palm Springs II, L.L.C., 2023 WL 2966520 (5th Cir. April 17, 2023), held that a senior lender who uses economic leverage and asserts its legal rights to squeeze out a junior lender remains a good faith purchaser entitled to declare an appeal moot based on a sale under section 363(m) of the Bankruptcy Code. Key to the Fifth Circuit’s opinion was the fact that the actions in question were disclosed to the bankruptcy court in advance of it making the section 363(m) finding.
Facts
Congress passed the operative texts without noticeable fanfare. From its enactment to today, section 363(k) has entitled a secured creditor to “credit bid” the full amount of the debt owed by a debtor in any sale of the underlying collateral pursuant to section 363(b). That this statutory bequest elicited little debate made imminent sense, for Congress had thereby codified one of secured creditors’ seemingly time-honored rights.
Re Nasmyth Group Ltd (Re Companies Act 2006) [2023] EWHC 988 (Ch) sets out Leech J’s reasons for refusing to sanction a Part 26A restructuring plan.
The company acted as the holding company of engineering subsidiaries in the UK and elsewhere and provided administrative and treasury functions to the rest of the group.