A lender’s state law tort claims against “non-debtor third-parties for tortious interference with a contract” were “not preempted” by “federal bankruptcy law,” held the New York Court of Appeals on Nov. 24, 2020. Sutton 58 Associates LLC v. Pilevsky, 2020 WL 6875979, *1 (N.Y. Ct. Appeals, Nov. 24, 2020) (4-3). In a split opinion, the Court of Appeals reversed the Appellate Division’s dismissal of a lender’s complaint against the debtors’ non-debtor insiders. The lender will still have to prove its case at trial.
The Asserted Claims
Contents
If in your position as director you allow your company to operate while insolvent and unable to pay debts, you could be liable to serious penalties.
The Australian Securities and Investments Commission (ASIC) outlines key considerations for directors whose companies are in financial difficulty or are insolvent.
Am I a director?
This week’s TGIF looks at recent litigation involving Henclo Investments Pty Ltd, where the NSW Supreme Court refused an application to wind up a company on the basis that an outstanding debt alone is insufficient to show insolvency.
Key takeaways
From iconic retail brands like Neiman Marcus to popular entertainment venues like Chuck E. Cheese, business bankruptcies have escalated in 2020 due to the COVID-19 pandemic. Company executives invested in Non-Qualified (NQ) plans risk losing a substantial amount in retirement savings due to guidelines set under Section 409A. These guidelines protect NQ plan assets from a change in corporate control but not from a bankruptcy filing, since NQ plan participants are treated as unsecured creditors.
In re Affordable Auto Repair, Inc., No. 6:19bk18367MW, 2020 Bankr. LEXIS 2366 (Bankr. C.D. Cal. Sept. 2, 2020).
Case Snapshot
On 26 November 2020, the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020 (the “Regulations”) came into force. As well as extending to 31 March 2021 the “relevant period” for certain temporary modifications to the holding of company meetings, the Regulations reintroduce the suspension of the liability for wrongful trading.
Howard Morris and Sonya Van de Graaff, Morrison & Foerster LLP and Avonhurst
This is an extract from the second edition of GRR's The Art of the Ad Hoc. The whole publication is available here.
Scope of the chapter
Monika Lorenzo-Perez and Sabina Khan, Brown Rudnick
This is an extract from the second edition of GRR's The Art of the Ad Hoc. The whole publication is available here.
Status and relationship of an ad hoc committee with indenture trustees
2020 has seen a significant increase in chapter 11 filings by oil and gas producers. Critical to the operations of these companies, and to the transportation and processing of the producer’s gas, are gathering agreements entered into between the producers and midstream companies. A pivotal question posed at the start of these chapter 11 proceedings is whether the gathering agreements are executory contracts subject to rejection or whether they create real property interests that cannot be rejected in chapter 11 proceedings. The answer depends on who you ask.