On December 1, 2014, the U.S. House of Representatives passed the Financial Institution Bankruptcy Act of 2014(FIBA).  The legislation passed on a voice vote and is supported by the major Wall Street banks.

Last Friday, the Sixth Circuit postponed oral argument in some of the pending cases in the appeal from the bankruptcy judge’s decision that Detroit was entitled to creditor protection under Chapter 9 of the U.S. Bankruptcy Code and could try to alter the terms of workers’ pensions. The postponement was apparently granted to allow various pension groups to settle with the city.

The Administrators of a group of companies put their proposals before the creditors who failed to approve the proposals. Indeed, they failed to vote at all. The Administrators applied for the proposals to be approved by the Court. It was held that such approval was not required unless  the proposals were actively opposed by creditors. In the absence of such approval, the judge considered that the administrators have the power to act in their own discretion. The judge also used the case to comment on the standard form of proposals used by most insolvency practitioners.

Case Note: Re Cardinia Nominees Pty Ltd [2013] NSWSC 32

Facts of the case

Cardinia Nominees Pty Ltd (Cardinia) agreed to lend Inika Pty Ltd (Inika) the sum of $750,000, in exchange for the issue of convertible bonds to Cardinia. The loan was secured by a charge in favour of Cardinia over the whole of Inika’s assets.

The question of which law is applicable to the insolvency of a party in an international commercial arbitration is a topical issue, particularly in the current financial crisis.Whether it be a desire to initiate arbitration; an arbitration that is already underway or where an award is to be enforced, the situation may arise where one party is, or will be, declared insolvent.

The term “frenemy” – a combination of the words friend and enemy – has emerged from modern vernacular to describe someone who is simultaneously a partner and an adversary. The term is perhaps perfectly emblematic of the restructuring process where various constituents make and break alliances in an effort to steer the restructuring process. In so doing, the lines between friend and enemy are often blurred or altered during the course of the restructuring.

In a market study, called “The market for corporate insolvency practitioners,” published on 24 June 2010 The Office of Fair Trading (OFT), proposed extensive reforms of the current corporate insolvency regulatory regime. After an eight-month study the OFT believes that reforms are needed to build market trust and create a regime that works in the best interests of creditors as a whole.

THE PERENNIAL PROBLEM OF UNPAID DEBTS – YOUR RECOVERY OPTIONS

On May 31, 2009, approximately 30 days after Chrysler Group LLC and affiliated debtors filed for bankruptcy relief, the United States Bankruptcy Court for the Southern District of New York authorized the sale of substantially all of Chrysler’s assets to “New Chrysler” – an entity formed by Chrysler and Fiat Automobiles SpA and initially majority-owned by Chrysler’s Voluntary Employees’ Beneficiary Association (VEBA) – free and clear of liens, claims and encumbrances under section 363 of the United States Bankruptcy Code (the Fiat Transaction).

This Act received Royal Assent in July 2007 but no date for implementation has been published yet.

In addition to the provisions contained in this Act aimed at improving the working of the tribunals system and increasing judicial diversity, are several sections that will be of interest to financiers and insolvency professionals: