An employment tribunal has recently confirmed that employees who have been unfairly dismissed from an insolvent employer can bring an action against a connected successor company.
The tribunal held that there was a ‘commonality of ownership’ between the original and successor companies and that it was correct as a matter of public policy that employees should be able to sue the newco born from the ashes of the insolvent company.
What can a lender do about successive bankruptcy filings by a borrower? What can lessors do when their tenants file successive bankruptcy petitions? A recent decision by a bankruptcy court in the Eastern District of New York gives guidance on these questions.
Readers of this blog know that immediately upon the filing of a bankruptcy petition, section 362(a) of the Bankruptcy Code imposes a stay on a variety of creditor activities. It freezes all actions to collect prepetition debts, as well as many other actions that could be taken by creditors against the debtor or property of the estate. The automatic stay is an integral part of the bankruptcy process, as it gives the debtor immediate relief from its creditors and an opportunity to deal with the creditors as permitted by the Bankruptcy Code.
The Slovak personal insolvency regime will change on March 1, 2017. The new system is aimed at opening personal insolvency to a wider debtor audience, while keeping it simple and cost effective. Today, only those individuals with assets over EUR 1,659.70 could seek a declaration of bankruptcy. Otherwise, the proceedings would be stopped and the doors to a “fresh start” would be closed for “poor” debtors (also called No Income No Asset debtors (NINAs)).
It is important to understand the motivation behind the new rules as one may find the new proceeding too open and accessible, leaving a lot of room for abuse and little protection for the creditors. The new insolvency proceedings could have been made more complicated, with lots of pre-opening scrutiny, much bigger involvement of a court, but that would obviously have raised the costs of such proceedings to much higher figures.
So what is changing? Continue Reading
In June and July 2016, several important amendments to the Federal Law No 127-FZ of 26 October 2002 ‘On Insolvency ’ came into effect in Russia. According to the Amendments, only after the preliminary payment has been made can information on insolvency proceedings be included into the Unified Federal Register of Data on Bankruptcy and published in an official mass media publication, which at the moment is the Russian business newspaper Kommersant.
Sergey Treshchev co-authored an article about the amendments with our Moscow office associate Elena Malevich which was published by the International Bar Association in its journal “Insolvency and Restructuring International” Vol. 10, No. 2, November 2016.
Click here to read the article.
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n the recent case of Gillan v HEC Enterprises Ltd (in administration) and Ors [2016] EWHC 3179 (Ch), the High Court considered (1) in what circumstances administrators can recover costs and expenses incurred in dealing with trust property and (2) how the administrators’ costs in applying for a Berkeley Applegate order and other litigation were to be dealt with. Continue Reading
It is not always easy to prioritize between the various goals pursued in every insolvency legislation, namely; the continuation of the company, preservation of the jobs, the general economic/public interest and the payment of dividends to creditors.
There is no clear hierarchy in French law amongst these major targets and French case law appears fairly pragmatic. However compared to Insolvency regulations in other countries, French legislation and French case law appear very protective of the interests of the employees.
This seems obvious when one considers, for example,
(1) the amount of regulation aimed at trying to save companies (and incidentally jobs) facing difficult (not to say desperate) economic situations, and
(2) the very favourable ranking of French employees’ claims, compared to other creditors, especially unsecured creditors
but France may be the only jurisdiction which gives employees a right of recovery against third parties for causing the insolvency of their employer.
The recent case of Re Newtons Coaches [2016] EWHC 3068 considered whether a partnership falls within the remit of s.216 Insolvency Act 1986 (“IA 86”). The case looked at what s.216 is designed to prevent and the nature of partnerships in the context of both the Insolvent Partnerships Order 1994 (“IPO 94”) and the IA 86. The Registrar held that s.216 does not apply to partners of a partnership that has been wound up.
Judge Carey in the District of Delaware recently ruled on an intriguing question—can a defendant in a preference action reduce the amount of a recoverable preference by setting off the value of an allowed administrative expense claim? Though not late-breaking news, this case provides a thorough examination of the essential character of administrative expense claims. Continue Reading
In a prior post, we discussed the Third Circuit Court of Appeals’ decision in Jevic Holding Corp., where the court upheld the use of so-called “structured dismissals” in bankruptcy cases, and the Supreme Court’s grant of certiorari. Yesterday, the Supreme Court heard oral argument in Jevic. The Court’s ultimate ruling will likely have a significant impact upon bankruptcy practice.
Under the Jevic structured dismissal, unsecured creditors received a distribution from a settlement reached between the official committee of unsecured creditors and secured lenders. Wage priority claimants received nothing from the settlement, notwithstanding their senior position under the Bankruptcy Code. The bankruptcy court approved the structured dismissal, and by extension the distribution provided for in the settlement, and the district court affirmed on appeal. The Third Circuit also upheld the structured dismissal, holding that the bankruptcy court has discretion to approve structured dismissals except if there is a showing “that the structured dismissal has been contrived to evade the procedural protections and safeguards of the plan confirmation or conversion process.”
The recent successful appeal in Brooks and another (Joint Liquidators of Robin Hood Centre plc in liquidation) v Armstrong and another [2016] EWHC 2893 (Ch), [2016] All ER (D) 117 (Nov) has clarified and highlighted the complexities of bringing a wrongful trading claim and the importance of correctly quantifying losses for which directors can be made personally liable under section 214 and/or 246Z of the Insolvency Act 1986 (“the Act”). Continue Reading
