The Macron law of 7 August 2015, named after the current Minister of the Economy, anticipated the establishment of specialised commercial courts which will process the most complex insolvency proceedings. Currently, any of the 134 French commercial courts can be applied to; the choice being mainly the location of the distressed company’s headquarters. This new arrangement aims to improve efficiency and to increase the number of specialised judges (because in France, commercial judges are lay judges). The aim of the reform is to save jobs.
Insiders who loot their corporate entities often dispose of the cash proceeds in transactions with third parties. A recent Seventh Circuit opinion, In re Equipment Acquisition Resources, Inc., 14-2174 (7th Cir. October 13, 2015) (the “EAR Opinion”)addresses a common risk faced by a third party who receives cash from the defrauding insider.
An important decision was issued last week by the Bankruptcy Court for the District of Delaware in favor of Squire Patton Boggs’ client CCA Bahamas, Inc. (“CCA Bahamas”). The decision provides guidance on when U.S. bankruptcy courts should dismiss cases filed by foreign debtors. See In re Northshore Mainland Services, Inc., et al., Case No. 15-11402 (KJC).
New guidance from the Pension Protection Fund (PPF) regarding pre-packaged administrations (pre-packs) outlines their approach to pre-packs when the same insolvency practitioner (IP) proposes to continue as office holder in any subsequent liquidation or company voluntary arrangement (CVA).
The courts continue to pick away at the “unfinished business rule.” The latest blow came earlier this month when a U.S. district court dismissed a Chapter 7 trustee’s claims against eight law firms who provided services to former clients of Howrey LLP. We are getting close to the point where the unfinished business rule may in fact be finished.
It is already relatively settled that an insider who has personally guaranteed the debt of his or her company may face preference exposure to the extent the guaranteed debt is paid down during the one-year preference period applicable to insiders. Without doubt, such payments directly benefit the guarantor, whose obligation to the primary creditor is reduced dollar for dollar.
The bankruptcy court yesterday handed General Motors (New GM) an enormous victory that may end up shielding the company from up to $10 billion in potential legal liabilities. In his 138-page ruling, Bankruptcy Judge Robert Gerber held that a 2009 bankruptcy order allowing the sale of the assets of “old” General Motors (Old GM) to New GM shielded New GM from death and injury claims tied to defective ignition switches in older cars.
Creditors have the right to challenge the remuneration and expenses of appointed administrators through the Court. There is a procedure set out in Rule 2.109(1B) Insolvency Rules including a time limit by which such a challenge should be made. The Court has a discretion to extend the time limit but in what circumstances will the Court exercise its discretion?
The legal principles governing corporate finance are often complex. Sometimes, however, the simplest of errors can be the most costly. Such was the case with a large syndicated secured loan made to General Motors. Due to a simple filing error, what had always been intended by the lender and borrower to be a secured loan will be treated as unsecured.
The Second Circuit Opinion in Motors Liquidation
The UK court recently considered the extent of s236 Insolvency Act 1986 (“IA 1986”) in the case of Re Comet Group Ltd (in liquidation); Khan and others v Whirlpool (UK) Ltd and another [2014] EWHC 3477 (Ch).