In a split decision, the United States Court of Appeals for the Ninth Circuit recently determined that the Bank of New York Mellon (the “Bank”), as first deed of trust lienholder, could challenge a homeowner’s association’s (“HOA”) sale of a property as a violation of an automatic bankruptcy stay, giving the Bank superior title. SeeBank of New York Mellon as Tr. for Certificateholders of CWALT, Inc., Alternative Loan Tr. 2005-54CB, Mortg. Pass-Through Certificates Series 2005-54CB v. Enchantment at Sunset Bay Condo. Ass’n, 2 F.4th 1229 (9th Cir. 2021).

This recent interlocutory decision in The Deposit Guarantee Fund for Individuals (" the DGF") v Bank Frick & Co AG ("Bank Frick") & Anor deals another blow to the DGF in its recent attempts to pursue claims in England which allegedly arise following the 2014-15 banking crisis in Ukraine.

Background

This week’s TGIF considers a recent decision that provides guidance on how and when a liquidator can sell partnership assets held by an insolvent corporate partnership manager to satisfy creditors’ claims.

Key Takeaways

Introduction

National Company Law Tribunal (“NCLT”) was introduced in the Companies Act, 1956 in the year 2002. However, despite that, the erstwhile Company Law Board continued to function and NCLTs remained only on the statute book. It was only in late 2016 when the Insolvency & Bankruptcy Code, 2016 (“IBC”) was notified, that the NCLTs became operational.

Exclusive Jurisdiction 

In its much-discussed decision, City of Chicago v. Fulton, 141 S. Ct. 585 (2020), the Supreme Court ruled that the City of Chicago (“City”) was not in violation of Section 362(a)(3) of the Bankruptcy Code for failing to release an impounded car to a debtor in bankruptcy.

It is important for a receiver or voluntary administrator to ensure that a proper sales process is undertaken relevant to the circumstances as there is no "one-size-fits-all" approach.

On Nov. 11, 2021, U.S. Bankruptcy Judge Craig Whitley in Charlotte, North Carolina ordered to move LTL Management LLC’s chapter 11 bankruptcy case to New Jersey after finding that LTL Management had used the “Texas Two-Step” to manufacture jurisdiction in North Carolina improperly. LTL Management is a subsidiary of Johnson & Johnson and a defendant in thousands of talc-related tort claim lawsuits. In re LTL Mgmt. LLC, No. 21-30589, 2021 BL 439798 (Bankr. D.N.J. Nov. 16, 2021).

Key Points

The Bankruptcy Protector

Most bankruptcy practitioners are familiar with the intentionally broad scope of discovery under Bankruptcy Rule 2004. However, there are limits to this discovery and the “pending proceeding” rule can be a useful tool to limit the scope of discovery in the appropriate circumstances.

Bankruptcy Rule 2004

A couple who were undischarged bankrupts have not been successful in seeking an exemption under the bankruptcy law to exclude certain assets from being divisible amongst the creditors of their bankrupt estates. Particularly, the exemption sought required that their interests in the disputed assets (cash, shares and residential properties) be held by way of interests in their self-managed superannuation fund (SMSF).

On 4 November 2021, the High Court of Australia heard the arguments put forward by Wells Fargo Trust Company, National Association and Willis Lease Finance Corporation, together Wells Fargo, and the administrators (the Administrators) of the Virgin Australia Airlines group, which entered into administration on 20 April 2020. The dispute primarily concerned who should pay for the redelivery of four aircraft engines capable of being used on B737s (the Engines) to the lease redelivery location in Florida.