On September 15, President Biden announced a tentative deal with unions representing tens of thousands of railroad workers that helped narrowly avoid a strike that threatened to devastate the country’s delicate supply chains that have been strained since the beginning of the pandemic. Now the country awaits the outcome of the union member votes (which we may not know until mid-November), but even if the members approve the deal, the retail sector will still face empty shelves, job vacancies and surging inflation.

As one of the nation’s premier bankruptcy venues, the Eastern District of Virginia (“EDVA”) has attracted some of the largest and most complex corporate bankruptcies. While companies file chapter 11 bankruptcies in the EDVA for many reasons—experienced judges, well-established legal precedent, a robust bankruptcy bar and local rules, and an expeditious docket (dubbed the “Rocket Docket”)—national law firms are also cognizant that EDVA courts have generally approved their fees, even when they exceed prevailing geographic market rates.

National Rates in the EDVA

The “fresh start” principle is a long-standing objective of Canada’s Bankruptcy and Insolvency Act (the “BIA“) that aims assist honest but unfortunate debtors by discharging debts owed to creditors. However, in the recent decision Poonian (Re), 2022 BCCA 274, the British Columbia Court of Appeal ruled that sanctions imposed by the British Columbia Securities (the “Commission“) in respect of fraud related misconduct will survive any discharge under the BIA.

T W Timber Treatment Pty Ltd v Giddings [2022] VSCA 147

The Victorian Court of Appeal has re-affirmed that a director’s signature can indicate an intention to personally guarantee a company’s obligations, even where that signature is qualified and accompanied by contrary indications in the signed document.

The Court also confirmed that a creditor’s rights under a director’s guarantee, including a right to interest, are not affected by a Deed of Company Arrangement (DOCA).

Background

A recent Hong Kong Court of Appeal decision examined a creditor’s right to commence bankruptcy/insolvency proceedings where the petition debt arises from an agreement containing an exclusive jurisdiction clause in favour of a foreign court: Guy Kwok-Hung Lam v Tor Asia Credit Master Fund LP [2022] HKCA 1297.

Foreign insolvency proceedings (including those ordered by the UK courts) have no direct operation in Guernsey. Therefore foreign insolvency office holders looking to take steps in Guernsey, such a collecting in assets or compelling the production of information from third parties, will need to first be recognised under Guernsey law before steps can be taken in this jurisdiction.

Guernsey has not introduced legislation based on the UNCITRAL model law on cross-border insolvency. It is also not (and was not prior to Brexit) subject to the Recast Insolvency Regulations.

How do you improve the image of company voluntary arrangements? Start by reforming the voting rules.

The effect of a liquidation order is to crystallise an insolvent company’s position in time and to ensure that no further transactions can be concluded by that entity. In other words, once a company is in liquidation and the concursus has occurred, no creditor may exercise its rights against that company in a manner prejudicial to other creditors.

This is a well-established principle of South African law, but what does it mean for a security taker wishing to, by agreement with the insolvent company, rectify a written agreement concluded prior to liquidation?

The High Court has granted leave to a taxpayer to appeal a District Court decision declining to dismiss charges of evading or attempting to evade assessments of payment of tax by him or another person. The High Court rejected the taxpayer’s submissions that the fact of his bankruptcy meant that he could not be liable for the charges brought against him. The Court held that a bankrupt could be charged for evading or attempting to evade the payment of GST when that bankrupt had operated a company that had charged and received GST on taxable supplies.

Facts

The Bankruptcy Protector

On August 18, 2022, the United States Bankruptcy Court for the Southern District of Indiana, in In re BWGS, LLC, No. 19-01487-JMC-7A, 2022 WL 3568045 (Bankr. S.D. Ind. Aug. 18, 2022), narrowly interpreted the safe harbor provision in section 546(e) of the Bankruptcy Code by refusing to dismiss a lawsuit against a guarantor whose liability was eliminated by the debtor’s payment to the bank that held the guarantee.

Overview on Section 546(e) of the Bankruptcy Code