Section 1124(2) of the Bankruptcy Code gives chapter 11 debtors a valuable tool for use in situations where long-term prepetition debt carries a significantly lower interest rate than the rates available at the time of emergence from bankruptcy. Under this section, in a chapter 11 plan, the debtor can "cure" any defaults under the relevant agreement and "reinstate" the maturity date and other terms of the original agreement, thus enabling the debtor to "lock in" a favorable interest rate in a prepetition loan agreement upon bankruptcy emergence.

The Court heard argument in the case on December 4, 2023.

Third-Party Releases in Chapter 11 Plans

The English High Court has clarified the test it will apply on an application for a moratorium. A company can get the benefit of a moratorium without applying to court but a court application is necessary if a winding up petition has already been presented or the company is an overseas company.

Background

A debtor's non-exempt assets (and even the debtor's entire business) are commonly sold during the course of a bankruptcy case by the trustee or a chapter 11 debtor-in-possession ("DIP") as a means of augmenting the bankruptcy estate for the benefit of stakeholders or to fund distributions under, or implement, a chapter 9, 11, 12, or 13 plan.

In most cases seeking recognition of a foreign bankruptcy proceeding in the United States under chapter 15 of the Bankruptcy Code, the foreign debtor's "foreign representative" has been appointed by the foreign court or administrative body overseeing the debtor's bankruptcy case.

On 1 November, the Supreme Court issued its judgment in R (on the application of Palmer) v Northern Derbyshire Magistrates Court and Another.

Background

The Bankruptcy Code does not explicitly authorize the equitable remedy of "substantive consolidation"—i.e., treating the assets and liabilities of two or more related entities as if they belonged to a single, consolidated bankruptcy estate. However, it is well recognized that a bankruptcy court has the authority to order such relief under appropriate circumstances in the exercise of its broad equitable powers when each of the original entities are already debtors subject to the court's jurisdiction.

In the recent case of Dilip B. Jiwrajka v. Union of India (Writ Petition (Civil) No. 1281 of 2021), the Constitutional Bench of the Supreme Court (the “SC”) upheld the constitutionality of Sections 95 to 100 of the Insolvency and Bankruptcy Code, 2016 (“IBC”).

The pilot measure for mutual recognition and assistance of insolvency proceedings between the courts of three pilot areas in Mainland China and Hong Kong was agreed in mid-2021, which is known as the Cooperation Mechanism.

Since then, liquidators in Hong Kong have had a more certain and structured route to seek, through Hong Kong Court, recognition and assistance from the designated Mainland courts in the three pilot areas including Shanghai, Shenzhen and Xiamen.

Key Takeaways

A Section 363 sale is a sale of a company's assets pursuant to Section 363 of the Bankruptcy Code. The Bankruptcy Court will approve a 363 sale if the debtor can demonstrate a "substantial business justification" for the sale.

Key Issues

In general, Section 363 bankruptcy sales proceed as follows: