The High Court of Australia is expected soon to hand down its judgment in Lehman Brothers v City of Swan. It is likely that this judgment will definitively determine whether Deeds of Company Arrangement under Pt 5.3A of the Corporations Act (“the Act”) are able to force creditors to give releases to third parties.
On December 29, 2008, the State Administration for Taxation (SAT) and the Ministry of Finance (MOF) jointly promulgated the Circular on Several Deed Tax Policies Concerning Enterprise Reorganization and Restructuring, (Cai Shui (2008) 175, Circular 175). Circular 175 took effect on January 1, 2009, and will be effective through December 31, 2011.
The continuing harsh economic conditions see more and more businesses going into examinership. Examinership has serious implications for landlords.
The administrators of Lehman Brothers International (Europe) have been intending to propose a scheme of arrangement under the English Companies Act to enable them to distribute several billions of dollars of assets held on trust by the company in the face of difficulties in establishing who was entitled to the trust assets; in particular, they had not received responses from all potentially interested clients, could not rely on the accuracy of the company's records and had not received all the information requested from sub-custodians and other intermediaries.
The retail sky is falling. At least that is how it appears from recent and unprecedented number of retailers filing for bankruptcy. From iconic stores such as Sears and Toys ‘R’ Us, to department stores such as Bon Ton, to mall stores including Brookstone, The Rockport Company, Nine West, among others. The reasons given for such filings vary as much as their products but one theme seems to be constant — the inability of retailers to maintain “brick and mortar” operating expenses in the era of online shopping.
In the recent UK case of Williams v Glover & Anor, the Court considered the novel issue of whether the right to appeal against a tax liability constitutes the "property" of a company in liquidation, in deciding whether such a right was assignable or not. In that case, the applicant liquidator sought directions as to whether it could assign the right to appeal against an assessment of tax liability to the respondent former directors of the company in liquidation. Judge Pelling QC held that while there were authorities that had considered this point, they were not binding.
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State Court Receiverships
Lehman Brothers Special Financing, Inc. v. Ballyrock ABS-CDO 2007-1 Limited (In re Lehman Brothers Holdings, Inc.) No. 09-01032 (JMP) (Bankr. S.D.N.Y. May 12, 2011)
CASE SNAPSHOT
Can the nondebtor party to an executory contract withhold services to the debtor postpetition if the debtor breached the contract prepetition?
Many view this as a settled area of bankruptcy law, and believe that the answer is “no” as long as the debtor is performing postpetition. Commentators of this view question how a debtor could ever reorganize if nondebtors did not have to perform under contracts postpetition, particularly if the debtor’s business is entirely dependant upon the contract at issue.