In The Toronto-Dominion Bank v Queen (2020 FCA 80), the Federal Court of Appeal (FCA) confirmed a Federal Court (FC) decision and ruled that a secured creditor had a statutory obligation to pay the Canada Revenue Agency (CRA) for a tax debt of an arm’s-length borrower because the secured creditor had received proceeds from the sale of the borrower’s property which was deemed to be held in trust by the Crown under the Excise

In Dhillon v Barclays Bank plc [2020] EWCA Civ 619, Mrs Dhillon sought rectification of the Land Register to remove a charge granted following a fraudulent transfer. The property was now worth over a million-pounds. The sum secured by the charge was over £600,000.

The sprawling and complex cross-border fraud litigation being pursued by the Joint Liquidators (Paul Atkinson and Glyn Mummery of FRP Advisory) of Grosvenor Property Developers Ltd (‘the Company’) has reached a significant milestone. The counsel team (instructed by Alyson Reilly and Séamas Gray of gunnercooke) led by Rory Brown (and including Martin Young, Nora Wannagat, and Andrew Shipley) has been involved in over 25 heavily contested hearings (in the High Court in London and in the CFI, DIFCC, Dubai) in the last 13 months.

Historically, the interests of landlords whose commercial real estate is occupied by debtors in Chapter 11 proceedings have been generally well protected. Indeed, Section 365(d)(3) of the Bankruptcy Code requires the debtor to timely perform all of its post-petition obligations under its nonresidential leases of real property — most important among those, rent.

The restructuring & insolvency Q&A series provides a comprehensive overview of some of the key points of law and practice of the regulatory environment in Luxembourg. Today's chapter focuses on the legal framework.

What domestic legislation governs restructuring and insolvency matters in your jurisdiction?

Trusts are established for many reasons. One of the most common is asset protection.

The recent decision of Boensch v Pascoe [2019] HCA 49 from the High Court gives some insight into how that asset protection could be undone in the event of the bankruptcy of an individual trustee.

Facts

One of the objectives of the Bankruptcy Code is to ensure that each class of creditors is treated equally. And one of the ways that is accomplished is to allow the debtor’s estate to claw back certain pre-petition payments made to creditors. Accordingly, creditors of a debtor who files for bankruptcy are often unpleasantly surprised to learn that they may be forced to relinquish “preferential” payments they received before the bankruptcy filing.

Can you take security over all types of assets, including working capital? Generally yes, before filing for the reorganization or the ruling setting forth the start of the liquidation bankruptcy. After the beginning of the reorganization proceedings, no further security interests can be granted over the assets of the debtor for credits due before the beginning of the reorganization proceedings. The debtor can grant security interests for new creditors after the start of the reorganization proceedings.

The US Court of Appeals for the Sixth Circuit affirmed that a state court’s finding of “willful and malicious injury” in connection with the misappropriation of trade secrets entitled the plaintiff, in the defendant’s subsequent bankruptcy proceeding, to summary judgment of nondischargeability on collateral estoppel grounds. In re Hill, Case No. 19-5861 (6th Cir. May 4, 2020) (Donald, J.).

In the very unusual period in which we find ourselves today, it seems to be common wisdom that an avalanche of commercial loan defaults is coming. As such, it is a good time to take a fresh look at the terms and provisions used in commercial workout documents, whether in a simple agreement that extends a maturity date or in a complex forbearance document that restructures the collateral arrangement and financial covenants.