Every now and then we get a glimpse into the past . . . that casts light on issues and events of today.

One such glimpse is a Harvard Law Review article from 1909: “The Effect of a National Bankruptcy Law upon State Laws.”[Fn. 1]. It’s by Samuel Williston—the same Samuel Williston who authored “Williston on Contracts” and who served as professor of law at Harvard Law School from 1895 to 1938. 

Bankruptcy v. State Laws—in 1909

In brief

In a decision that may encourage continued sales from suppliers to distressed entities, the Eleventh Circuit in Auriga Polymers Inc. v. PMCM2, LLC1 joined the Third Circuit,2 the only other circuit to directly address the issue, in concluding that post-petition payments for the value of goods received by a debtor within 20 days before the petition date, authorized by 11 U.S.C. section 503(b)(9), do not reduce a creditor's "subsequent new value" preference defense.

I. Preferences in a Nutshell

The court's decision in In re Imerys Talc America, Inc. clarifies the appointment standard for future claimants representatives in the Third Circuit under Section 524(g) of the US Bankruptcy Code.

In a precedential decision, the US Court of Appeals for the Third Circuit upheld the appointment of James L. Patton, Jr. as the legal representative for future talc claimants (FCR) by the bankruptcy court in the Imerys Talc America chapter 11 cases.1

Oliver Fitzpatrick, a partner in the firm’s Business Support and Insolvency team, successfully acted for a company in resisting an application that was made against it by a petitioning creditor for permission to appeal earlier decisions made by Insolvency and Companies Court Judge Barber to (a) dismiss that petition forthwith and (b) have the petitioning creditor pay our client’s costs in dealing with the petition.

Following an August 4, 2022 memorandum opinion from Judge Brendan L. Shannon of the United States Bankruptcy Court for the District of Delaware, a party to a safe harbored contract can qualify as a “financial participant” under section 546(e) of the Bankruptcy Code even where the party was not a financial participant at the time of the transaction.

The Court of Appeal has held that a settlement agreement between a bank and a group of companies which included releases of the parties’ affiliates prevented the companies from later pursuing claims against their own affiliates. Those affiliates were held to include former administrators appointed by the bank and the administrators’ solicitors: Schofield v Smith [2022] EWCA Civ 824.

The Hong Kong court has sanctioned a scheme of arrangement for a Hong Kong-listed, Bermuda-incorporated fertilizer manufacturer based in the mainland. In doing so, the Honorable Mr Justice Harris also warned holders of U.S. denominated debt that where they use offshore schemes of arrangement, they run the risk of individual creditors presenting winding-up petitions in Hong Kong. The view has however been queried in recent U.S. authority.

On August 6, 2022, OSG Group Holdings, Inc., which provides transactional, marketing, and payment solutions to various industries, filed a petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware (Case No. 22-10718). The company also filed a prepackaged plan of reorganization.

Bankruptcy issues have been around for a very long time—for centuries, in fact.

And bankruptcy issues have been discussed in these United States for the entire time of our existence–and before.

Even in our Colonial times (prior to 1776), bankruptcy and insolvency issues were in much discussion—especially since debtors often found themselves imprisoned, back then, for unpaid debt.