Court of Final Appeal affirmed the Court of Appeal’s decision that the Trustees in Bankruptcy did not owe an implied duty to act with reasonable care and skill towards a major creditor.
The Claim
The High Court has allowed an application for an order to enable access to a bankrupt’s pension to satisfy debts arising from fraud. Prior to the bankruptcy, judgment was obtained against him for £3.2m plus costs.
1 The Third Circuit also affirmed a judgment that awarded the senior creditor damages for the misapplication of such collateral proceeds in violation of the intercreditor agreement’s turnover provision.
A bankruptcy court gave "unnecessary and likely incorrect" reasoning to support its "excessively broad proposition that sales free and clear under [Bankruptcy Code ("Code")] Section 363 override, and essentially render nugatory, the critical lessee protections against a debtor-lessor under [Code] 365(h)," said the U.S. Court of Appeals for the Fifth Circuit on Feb. 16, 2022. In re Royal Bistro, LLC, 2022 WL 499938, *1-*2 (5th Cir. Feb. 16, 2022).
Smile Telecoms Holdings Limited (“Smile”), a Mauritian company, has recently had its second restructuring plan sanctioned by the High Court in England. The case contains some important markers for those involved in restructuring plans, particularly those plans which involve international elements or which seek to prevent out-of-the-money creditors from voting on the plan.
Background
Key takeaways
The Bankruptcy Amendment (Service of Documents) Regulations 2022 came into effect on 6 April 2022. The regulations are intended to clarify that certain documents under the Bankruptcy Act 1966 (Cth), including a bankruptcy notice, can be given, sent, or served electronically without obtaining the prior consent of the recipient to receive the document electronically.
Brief background
The section: Section 553C of the Corporations Act 2001 (Cth) (“Act”) provides for a statutory set-off between an insolvent company and a party seeking to have a debt or claim admitted in the company’s winding up.
This week’s TGIF focuses on The Australian Sawmilling Company Pty Ltd (in liq) v Environment Protection Authority [2021] VSCA 294 in which the Court set aside a disclaimer of onerous property, such that liquidators were held liable under environment protection legislation.
Key Takeaways
Here’s an important rule for mediators:
- When the parties try to present you with a binary equation—“either this or that”—reject it; instead
- Get the parties involved in the process with you—try to help think your way out of the binary box they are trying to put you in.
–From Judge Gerald E. Rosen [fn. 1] in a May 2021 interview on mediation in the City of Detroit bankruptcy [fn. 2].
And here’s an illustration of how Judge Rosen faced a binary equation of huge proportions in the City of Detroit bankruptcy—from that interview.
The Bankruptcy Protector
Envision a scenario in which you purchased a right of first refusal for a parcel of real estate. That right, as bargained for, would let you purchase the parcel if it was put up for sale by matching any competing bidder’s offer. As a diligent prospective purchaser, you would naturally record that right of first refusal in the appropriate land records. So far so good.