Section 550 of the Bankruptcy Code provides that, when a transfer is avoided under one of several other sections of the Code, a trustee may recover “the property transferred, or, if the court so orders, the value of such property” from “the initial transferee of such transfer,” “the entity for whose benefit such transfer was made,” or “any immediate or mediate transferee of such initial transferee.” 11 U.S.C. § 550(a).

On July 6, 2020, the United States Court of Appeals for the Seventh Circuit (which covers appeals from federal courts in Indiana, Illinois and Wisconsin) handed down the third in a series of decisions related to Chicago debtors seeking chapter 13 bankruptcy protection in order to avoid or defer paying parking and other vehicle fines. The key take away from the decision is that a bankruptcy court may confirm a chapter 13 repayment plan that holds property in the estate, but must make a finding of good, case-specific reasons for doing so.

The COVID-19 pandemic is upending economies globally, causing a wave of unexpected insolvencies. The businesses that remain standing may face the question: will my insolvency or that of my counterparty prevent me from resolving disputes by arbitration?

The short answer is no. However, depending on the jurisdiction, there will be some limitations on what can be decided by arbitration. We have therefore briefly summarized some of the issues and challenges that a party may face under US law in the context of an arbitration arising from its own or an opposing party’s insolvency.

A Chapter 13 bankruptcy plan requires a debtor to satisfy unsecured debts by paying all “projected disposable income” to unsecured creditors over a five-year period. In a recent case before the U.S.

UK CORPORATE INSOLVENCY AND GOVERNANCE ACT 2020

9 JULY 2020

IN THIS ISSUE:

Permanent Insolvency Changes A New Standalone Moratorium A New Restructuring Plan Ipso Facto Termination Clauses

Temporary Insolvency Changes Modification of Wrongful Trading Liability Statutory Demands Winding Up Petitions Winding Up Orders

Further Changes

Governance Changes Company Meetings Company Filings

Final Thoughts

Ability of a debtor to assume, assign, or reject oil and gas “leases” under section 365 of the Bankruptcy Code

The U.S. Court of Appeals for the Sixth Circuit recently held that wages withheld as a voluntary 401(k) contribution prior to filing bankruptcy were not considered “disposable income” under a Chapter 13 bankruptcy plan.

A copy of the opinion in In re Camille Davis is available at: Link to Opinion.

An individual debtor (“consumer”) filed a Chapter 13 bankruptcy with more than $200,000 in debt ($189,000 unsecured debt) and fewer than $39,000 in assets.

The COVID-19 pandemic has caused economic turmoil that may provide opportunities for financially secure companies with capital to make a strategic acquisition of distressed assets and for investors to acquire valuable assets. The following highlights some important considerations when evaluating a purchase of distressed assets.^[1]

How to Finance the Purchase of Distressed Assets

Introduction

Two recent bankruptcy court cases remind counsel of the great importance of knowing the proclivities of the presiding panel of judges who will hear your client’s case. Experienced practitioners know the law and the best advocates also know the assigned judges. Both cases discussed below illustrate the importance, at least in bankruptcy practice, of arguing the law in a fashion that addresses the court’s sense of what is fair and proper under the case’s unique circumstances.

Voluntary Retirement Plan Contributions Are Required for Maintenance or Support?