Category Archives: Bankruptcy

David James will be back on screens this week as he appears on Richard Osman's House of Games.

The former England goalkeeper will appear alongside Olympic champion Denise Lewis and comedians Isy Suttie and Rhys James as he competes in a series of trivia-based games across the week.

David, 51, might be best known for his footballing career, but since retiring from the sport he's gone down a rather different path.

READ MORE:Richard Osman's House of Games: Steve Backshall's famous wife is a two-time Olympic champion

The House of Games star is a keen artist, and since leaving the pitch he has taken to painting regularly, auctioning off several of his creations for charity.

He also put his artistic talents to good use by illustrating his friend Steve Pearson's popular children's book, Harry's Magic Pockets: The Circus, in 2008.

David is also no stranger to the world of television, having appeared on game shows including Celebrity Mastermind and Pointless Celebrities in recent months.

He also appeared in the seventeenth series of BBC's Strictly Come Dancing in 2019, becoming the fourth celebrity to be eliminated with professional partner Nadiya Bychkova.

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In terms of his personal life, David was previously married to Tanya James, with the couple welcoming four children together.

Following their split, the former Liverpool goalkeeper fell upon harder times, and it was widely reported that the costs incurred in their 2005 divorce contributed to his bankruptcy nine years later.

After being declared bankrupt in May 2014, David was forced to sell off hundreds of items of football memorabilia he collected over the years in order to pay off the debts, including 150 signed shirts, shorts and match balls.

Richard Osman's House of Games airs weekdays at 6pm on BBC2 and BBC iPlayer

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Richard Osman's House of Games: David James' life from bankruptcy to unusual second career - Birmingham Live

Archbishop Michael Byrnes announces the archdiocese's filing of Chapter 11 bankruptcy in light of the number of clergy sex abuse cases facing the church.

Lawyers in the bankruptcy case for the Archdiocese of Agaa will determine whether letters recounting the churchs acquisitions could be used as evidence if witnesses are able to testify at trial.

The Dulce Nombre de Maria Cathedral Basilica in Hagta.

A motion filed by the Official Committee of Unsecured Creditors to exclude the letters from trial was argued at the District Court of Guam Friday.

The creditors argued the letters to Archbishop Michael J. Byrnes include hearsay because they are personal accounts about the archdioceses property.

The community statements are about individual feelings and intentions, said creditors attorney Andrew Glasnovich.

Glasnovich added the contents could not be an exception to the hearsay rule, which requires more reliability.

The archdiocese, however, said the letters include histories of acquisitions.

They would appear to have some inherent reliability and that they are simply relating to the date and a piece of property, said Ford Elsaesser, who used a letter discussing the history of a piece of land in Sumai-Santa Rita being used by the church.

After arguments were made, the creditors primary concern came down to the letters not being accompanied by witnesses who could testify to them at trial. A letter standing alone, they argued, would be considered hearsay.

Chief Judge Frances Tydingco-Gatewood, to resolve the issue, asked attorneys to confer as to whether they could get the writers of the letters to testify.

In 2019, a complaint filed by the Official Committee of Unsecured Creditors said the Archbishop of Agaa did not Catholic schools and parishes as owned property when filing for bankruptcy.

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Lawyers to discuss whether letters to archbishop will be included in bankruptcy trial - Guam Pacific Daily News

On February 8, 2021, the Congress of the Republic of Guatemala approved the Insolvencies Law. Such Law will imply material and important changes to the legal framework applicable to insolvency and bankruptcy procedures, which will be oriented to benefit the reorganization and continuation of business for debtors that are facing insolvency, so they may comply with their credit obligations without endangering the creditors rights. The next step for the Law on Insolvencies entry into force, is to obtain the presidential approval and publication by the Executive Branch of government. At Arias Guatemala, we participated pro bono in the analysis of the bill by providing our observations and recommendations thereof, as we consider that it will create a balanced ecosystem between entrepreneurs and the continuation of business with its creditor, favoring business instead of its liquidation.

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Guatemala - changes in the regulations regarding insolvencies and bankruptcy: approval of the law on insolvencies, by virtue of which the existing...

The allowance of postpetition interest in solvent debtor chapter 11 cases has become an important issue in recent years for corporate issuers, bondholders and other creditors. This post will examine a recent decision in the Hertz case by Judge Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware on the rate of interest payable to unsecured creditors who are entitled under the Bankruptcy Code to full payment of their claims under a plan of reorganization. (Judge Walrath also addressed other topics in her decision pertaining to the allowance of make-whole premiums, which were examined in an earlier post.)

Background:

The Hertz Corporation filed for protection under chapter 11 of the U.S. Bankruptcy Code in May 2020, its business decimated by the Covid-19 pandemic. In little more than a year, however, it had recovered so successfully that it was able to propose a plan of reorganization that purported to pay unsecured creditors in full.

Hertz claimed that under its plan, the holders of its over $2.7 billion of unsecured bonds were unimpaired. Hertzs plan proposed to pay the bondholders the full principal amount of the bonds, and interest accrued during the course of the chapter 11 case at the federal judgment rate rather than the significantly higher rate set forth under the terms of the bonds and the indentures.

The bondholders disputed that their claims were unimpaired because, among other things, the plan did not provide for payment at the contract rate under the indentures. They also argued that a pre-Bankruptcy Code equitable doctrine commonly known as the solvent debtor exception entitled them to full payment of interest.

The two sides agreed to let the plan proceed to confirmation and have Judge Walrath determine afterwards what the bondholders were entitled to receive. Post-confirmation, Hertz moved to dismiss the bondholders claims for postpetition interest at the contract rate under the indentures.

Judge Walraths Analysis

In her decision on Hertzs motion to dismiss the claims, Judge Walrath looked at the Bankruptcy Code to resolve whether the contract rate or the federal judgment rate would apply on any allowed postpetition interest.

Non-Impairment Under the Bankruptcy Code, creditors claims are unimpaired if the plan . . . leaves unaltered the legal, equitable and contractual rights of the holder of such claim. Unimpaired creditors do not have a right under the Bankruptcy Code to vote to accept or reject a proposed plan, but are instead deemed to accept. The bondholders asserted that their treatment as unimpaired creditors under the plan entitled them to all of their rights under the indentures, including the payment of both the make-whole premiums and interest at the contract rate.

Judge Walrath disagreed. In most chapter 11 cases, section 502(b) of the Bankruptcy Code expressly disallows claims for unmatured interest, i.e, interest which had not yet accrued as of the commencement of the case. She cited a Third Circuit decision, PPI Enterprises, that held that a creditors claim was not impaired if the claim was limited or disallowed not by the plan itself, but rather by the Bankruptcy Code as a matter of law. Since section 502(b) disallows claims for unmatured interest, the failure under the plan to provide for payment of future unpaid interest would not constitute impairment.

Solvent Debtor Exception The bondholders cited a number of pre-Bankruptcy Code cases which held that where a debtor is solvent, creditors are entitled to contract rate interest on their claims and other contractual rights before any value should go to shareholders.

The bondholders pointed to a recent decision by Judge Marvin Isgur in the Southern District of Texas who, faced with similar issues in the case of Ultra Petroleum Corp., ruled that the solvent debtor exception remained good law and effectively overrode section 502(b)s disallowance of unmatured interest with respect to solvent debtors and required the payment of interest at the contract rate.

Judge Walrath acknowledged the solvent debtor exception, but interpreted it more narrowly than Judge Isgur. She pointed to section 726(a)(5) of the Bankruptcy Code, which provides for payment of interest at the legal rate in solvent debtor chapter 7 liquidation cases, and section 1129(a)(7) of the Bankruptcy Code, which mandates that impaired creditors be treated as well under a chapter 11 plan as they would under a hypothetical chapter 7 case.

Judge Walrath determined that the weight of caselaw authority viewed the legal rate under section 726(a)(5) as the federal judgment rate rather than contract rate interest. Reasoning further that Congress could not have intended for unimpaired creditors to be treated worse than impaired creditors, she held that the solvent debtor exception required payment of accrued and unpaid interest on the bonds at the federal judgment rate.

Conclusion

Judge Walrath recognized the solvent debtor exception to the disallowance of unmatured interest under section 502(b), but only to the extent of requiring payment of accrued postpetition interest at the federal judgment rate.

Value fluctuations stemming from the pandemic disruption and the subsequent rapid recovery, and ongoing economic volatility and uncertainty means that more solvent debtor cases can be expected moving forward into 2022. Given the influence of the Delaware Bankruptcy Court in large chapter 11 cases, Judge Walraths analysis in Hertz will inform the calculations of debtors and bondholders during plan negotiations in such cases.

Originally posted here:

Driving While Unimpaired Delaware Judge Issues Important Ruling in Hertz Chapter 11 Case on Allowance of Make-Whole Premiums, Treatment of Unimpaired...

Not long ago, at malls and strip centers across Illinois, shoppers could count on finding Dress Barns, Lane Bryants, Ann Taylors, Justices and other apparel stores run by Ascena Retail Group. Five years ago, the retailer operated nearly 5,000 bricks-and-mortar locations catering to women, teens and tweens. As of 2020, that number had been halved and the bankrupt chain has agreed to sell off its surviving stores.

Fashion apparel is a tough business for any merchant, given powerful e-commerce competition and the effects of the pandemic on all retail sectors. In the case of Ascena, some of its wounds were self-inflicted, and the efforts of its leaders to avoid a courtroom reckoning have turned its bankruptcy case into a landmark. We hope the U.S. Supreme Court will take notice.

Ascenas troubles began in 2015, when it paid more than $2 billion for Ann Inc., parent of Ann Taylor, Loft and other retail clothing chains. Over the next two years, executives at the then-publicly held company told investors on at least several occasions that business was going well. In May of 2017, Ascena warned of trouble ahead and its stock plunged. Weeks later, it took a $1.3 billion restructuring charge, and the operation only went downhill from there.

In its bankruptcy reorganization, Ascena received sweeping legal protections for the companys former senior officers and other insiders. These so-called third-party releases protect individuals who never filed for bankruptcy themselves from lawsuits arising from their conduct, ending potential claims that normally would be resolved by judges or juries in other courts.

These legal releases have become common in corporate bankruptcy cases, and, to put it bluntly, they stink.

Readers of this page may recall that the Sackler family of Purdue Pharma, the notorious pusher of opioids, received these same releases. Though none of the Sacklers had filed for personal bankruptcy, the judge in their companys case approved a settlement allowing family members to walk off with billions they had made selling addictive drugs and with no worries about being sued in other courts.

The outcome was so outrageous that it prompted a backlash, and a New York district judge overturned the Purdue settlement. Her ruling highlighted how these releases have become common in bankruptcy reorganizations. Debtors file their cases in venues known for doling them out routinely or threaten to drag out proceedings at the expense of creditors unless they get the free legal passes they want.

Neither the Sacklers nor any other stewards of busted companies should have so much leverage to distort justice. Finally, it appears that a re-consideration is at hand, as district judges scrutinize the use of these releases in other bankruptcies besides Purdues, which was especially antagonizing because so many people died from its drugs.

Nothing about the Ascena case is as bad as the deadly facts behind the Purdue case. Whenever publicly held companies take huge write-downs, as Ascena did, securities fraud claims typically follow. Often those claims go nowhere or settle for relatively small amounts.

Still, the claims deserve to be heard, and its fundamentally wrong that a bankruptcy judge can, as a regular practice, waive them away. If there was misconduct, those involved should be held accountable.

In a sharply worded ruling, U.S. District Judge David Novak last month overturned the Ascena bankruptcy settlement and sent it back to bankruptcy court, pointedly directing it to a new judge.

Novak described the broad legal releases in Ascenas reorganization plan as shocking, saying they would have released practically everyone involved from practically every possible claim, including a pair of former executives targeted in the investor fraud case.

Novak called out a lack of due diligence undertaken by the bankruptcy court before the sweeping releases were granted. In theory, the releases could have been necessary to protect the reorganized business from ongoing litigation costs, such as defending lawsuits against the companys former executives.

Enough, already. There may be rare instances where these releases are needed, but their mindless proliferation has got to stop.

While legislation is pending in Congress to address the issue, the ultimate authority is the U.S. Supreme Court. We urge the nine justices to take up the first available case to rein in this disturbing practice once and for all.

The above editorial was published Feb. 4 by the Chicago Tribune. Its views are its own.

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End the free passes at bankruptcy court - bedfordgazette.com

08 February 2022

Cooley LLP

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An official notice from the Judicial Conference of the United States wasjust published announcing that certain dollar amounts in theBankruptcy Code will be increased a larger than usual 10.973% thistime for new cases filed on or after April 1, 2022. Follow thislink for the Federal Register page with a chart listing allof the updated dollar amounts. Among the most meaningfulincreases for Chapter 11 and other business bankruptcy cases:

Other adjustments will affect consumers more than businessdebtors. For example, the debt limit for an individual to qualifyfor a Chapter 13 bankruptcy case will rise to $1,395,875 of secureddebt, and certain exemption amounts will also increase.

Given recent inflation, these increases are larger than usual.Be sure to keep them in mind when assessing cases filed after April1, 2022. Official bankruptcy forms will likely be updated as April1st draws near.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

POPULAR ARTICLES ON: Insolvency/Bankruptcy/Re-structuring from United States

Jones Day

One year ago, we wrote that, unlike in 2019, when the large business bankruptcy landscape was generally shaped by economic, market, and leverage factors, the COVID-19 pandemic dominated the narrative in 2020.

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Moving Up: Bankruptcy Code Dollar Amounts Will Increase On April 1, 2022 - Insolvency/Bankruptcy/Re-structuring - United States - Mondaq News Alerts

The United States Supreme Court ruled that 11 U.S.C. 330(a)(1) does not authorize compensation to debtors attorneys from estate funds. Lamie v. U.S. Trustee, 540 U.S. 1023 (2004). A chapter 7 lawyer cannot look to the estate or to the debtor postpetition for payment of fees for services rendered or to be rendered if the obligation to pay the fee arose prepetition. That leaves four payment options:

(1) delay filing the case until all the fees are paid;

(2) file the chapter 7 case without getting paid and hope that the debtor will voluntarily pay additional fees postpetition;

(3) the attorney can bifurcate the legal services; or

(4) the debtor can file a chapter 13 case so that the fees can be paid post- petition.

In an opinion that represents the legal conclusions of all the judges of the Bankruptcy Court of the Southern District of Florida, Judge Isicoff held that

so long as attorneys offering a bifurcated fee arrangement comply with the terms of this Order, those arrangements do not violate the Bankruptcy Code or Bankruptcy Rules, this Courts Local Rules, or the Florida Bar Rules. In re Brown, 631 B.R. 77, 105 (Bankr. S.D. Fla. 2021).

In an opinion that represents the the legal conclusions of all the judges of the Bankruptcy Court for the Western District of Kentucky, Judge Lloyd held that

the bifurcated fee agreements entered . . .in each of the eleven cases herein violate the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the Kentucky Rules of Professional Conduct. Such contracts are not to be used by any attorney practicing bankruptcy law in the United States Bankruptcy Courts for the West District of Kentucky. In re Balwin, 2021 Bankr. LEXIS 2753 at *50 (Bankr. W.D.Ky. 2021).

What made the difference?

Local Rules?

Local Rule 2091-1 of the Bankruptcy Court for the Southern District of Florida provides:

(D) Attendance at Hearings Required for Debtors Counsel. An attorney who makes an appearance on behalf of a debtor must attend all hearings scheduled in the debtors case that the debtor is required to attend under any provision of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, or order of the court, unless the court has granted a motion to withdraw pursuant to Local Rule 2091-1.

(E) Duties of Debtors Counsel. Unless the attorney has withdrawn as attorney for the debtor pursuant to Local Rule 2091-1, an attorney who files a petition on behalf of a debtor must advise the debtor of, and assist the debtor in complying with, all duties of a debtor under 11 U.S.C. 521.

Local Rule 9011-1 of Local Rules of United States Bankruptcy Court of the Western District of Kentucky provides:

AttorneysDuties

(a) Extent of an Attorneys Duty to Represent.

(1) An attorney who files a bankruptcy petition for or on behalf of a debtor will remain the responsible attorney of record for all purposes including the representation of the debtor in all proceedings that arise in conjunction with the case.

(2) An attorney is relieved of his duties when the debtors case is closed, or when the attorney is specifically relieved after notice and a hearing upon motion and order of this court.

Courts Mindsets

The Florida court looked for a way to authorize bifurcated fee arrangements.

These three cases present this Court with the opportunity to provide a framework for when and under what circumstances bifurcation of chapter 7 fees is allowable. 631 B.R. 77, 85.

The Kentucky court was satisfied that it could not be done.

The attorney cannot bifurcate his or her representation of the debtor. 2021 Bankr. LEXIS 2753 at *35.

With BAPCPA, Congress greatly encouraged debtors to file chapter 13. In the Western District of Kentucky debtors must only tender a filing fee or a motion to pay the filing fee in installments to get the Chapter 13 case filed, as counsel are paid over time through a plan administered by a standing Chapter 13 trustee. While Chapter 13 is not necessarily available to all debtors, its (sic) flexibility is well-known in the district and is used quite often when debtors cannot pay their lawyers the full Chapter 7 fee up front on a pre-petition basis. 2021 Bankr. LEXIS 2753 at *51.

The two courts agree on some issues.

The filing fee is a prepetition charge

Both courts agree that a law firms payment of the filing fee with post-petition repayment by the debtor violates Bankruptcy Code 526(a)(4)(a debt relief agency shall not advise any assisted person or prospective assisted person to incur more debt in contemplation of such person filing a case under this title), 362 and 524 (effect of discharge), and Rule of Professional Conduct 4-1.8(a)(prohibiting financial assistance to a client).

Required disclosure

Both courts agree that adequate disclosure to the debtors and the court is required.

The Florida court held that the disclosures to a potential client are adequate so long as

The Kentucky court seems satisfied with this list. 2021 Bankr. LEXIS 2753 at *38.

Factoring of fee agreements is prohibited.

The Florida court determined that it will not allow any attorney to factor its legal fees. This creates an inherent conflict of interest between the attorney and the debtor, and violates R. Regulating Fla. Bar 4-5.4, 4-1.8, and 4-1.7. 631 B.R. 77,99 n. 34.

The Kentucky court held that the factoring of fees violates the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the Local Rules of the United States Bankruptcy Court for the Western District of Kentucky and the Kentucky Rules of Professional Conduct. 2021 Bankr. LEXIS 2753 at *25.

Fees must be reasonable.

Both courts specify that fees must be reasonable, but they interpret this statement differently.

For the Florida court reasonableness is not measured by a comparison between theprepetition charges and the postpetition charges. The court will review the reasonableness of the postpetition flat fee charged taking into account not only the work that was done but also the services that might have been required in the case for which there would have been no additional charge. The court holds fees of $1262 and $1362 for postpetition services was reasonable. 631 B.R. 77, 104.

The Kentucky court found that a fee of $2,500 for postpetition services was unreasonable by comparing it to the fees charged by that attorney in other chapter 7 cases of $1,250.

Conclusion

Know your local courts.

[View source.]

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Bifurcated Fee Agreements Approved in Southern District of Florida, But Barred in Western District of Kentucky - JD Supra

The Mumbai bench of the National Company Law Tribunal (NCLT) has directed the liquidator of Sterling Biotech to stay the auctioning process of the company until further orders.

The NCLT was hearing a petition filed by one of Sterling Biotechs successful qualified bidders, India Gelatine and Chemicals Ltd.

Gujarat-based Sterling Biotech is the worlds sixth-largest manufacturer of pharmaceutical gelatin and owes over Rs 8,100 crore to financial and operational creditors.

In view of the fact that the assets of the corporate debtor (Sterling Biotech) are not perishable, no harm or prejudice will be caused to the respondent (liquidator) as far as the auction is concerned even if the same is postponed for a short time, the NCLT bench led by Justice Pradeep Deshmukh said in its order of January 31.

NCLT will hear the matter next on February 16.

Originally, this lease was given by another group company Sterling SEZ to Sterling Biotech, which was later cancelled by the former company. Sterling Biotechs plea challenging that termination by Sterling SEZ is also pending in the NCLT. Later, the collector in Gujarat cancelled the lease on the same land parcel.

To be sure, Sterling SEZ is a separate group entity and the tribunal has also ordered the liquidation of the company on October 18, 2021.

Now, India Gelatine and Chemicals has sought the tribunals intervention to get more clarity on the issue.

The lawyers for the liquidator have informed the tribunal that the company is being sold as a going concern and that all the bidders have been informed about the latest developments with regard to the cancellation of the lease and other matters.

Currently, India Gelatine and Chemicals in a consortium with Shamrock Pharmachemi Pvt Ltd is among five qualified bidders to participate in an auction of Sterling Biotech. Other bidders include US-based startup Perfect Day Inc, Belgian firm Tessenderlo Chemie International NV, ACG Associated Capsules and Progressive Star Finance Pvt Ltd.

The liquidator has set a reserve price of Rs 548.46 crore for the company.

Mamta Binani, the liquidator for Sterling Biotech, and her associate Lovkesh Batra refused to comment since the matter is sub judice.

It is critical that the auction occurs within the stipulated time frame to maintain bidders' interest, and also that the lease in question is not terminated, since this would diminish the value of the corporate debtor's assets, which are a critical component of the assets, said Sonam Chandwani, managing partner, KS Legal.

The group and its subsidiaries, Sterling SEZ and Sterling International, collectively owe Rs 15,000 crore to financial and operational creditors.

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Bankruptcy court temporarily stays auction of Gujarat-based Sterling Biotech - Economic Times

Last month, a federal judge approved the largest debt restructuring plan ever reported in the United States, paving the way to end Puerto Rico's long and painful bankruptcy process.

The plan -- capping a years-long debate between creditors and local and federal officials --- reduces the largest part of the islands largest outstanding debt portion from $33 billion to about $7 billion. Debt originally amounted to $70 billion plus $50 billion in pension obligations.

Puerto Ricos Electric Power Authority separately owes more than $9 billion. The financial oversight board responsible for extricating the island from bankruptcy expects to have a plan for that debt later this year.

Last week, the longtime executive director of the board, Natalie Jaresko, who helped negotiate the plan, announced her resignation effective in April. She and the board have faced criticism for the length of time it took to negotiate the plan as well as austerity measures imposed in the meantime, but they lauded the deal as a historic step for Puerto Rico's future.

Although the plan is a step forward in moving Puerto Rico out of crushing debt, experts remain concerned about the islands economic future.

According to the Center for the New Economys policy director Sergio Marxuach, the plan is based on long term projections for the economy, which are very uncertain.

Economists are expecting an influx of money to reach Puerto Rico in the next five years linked to the recovery efforts from both hurricanes and the earthquakes. But the rest of the economy remains uncertain.

People protest the Debt Adjustment Plan outside the federal court where it is being considered by bankruptcy Judge Laura Taylor Swain in San Juan, Puerto Rico, Nov. 8, 2021.

I want to believe that elected officials in Puerto Rico and in the U.S. are concerned that Puerto Rico needs to grow after the reconstruction ends, economist and professor at the University of Puerto Rico, Jos Caraballo-Cueto told ABC News.

The economy is not going to grow by itself, and it's not going to grow jobs based on more fiscal stimulus either by receiving new federal funds or rather by issuing new debt, Caraballo-Cueto added.

How Puerto Ricos economy faltered?

Decades of mismanagement and excessive debt led Puerto Rico to file for bankruptcy in 2016 under the Puerto Rico Oversight Management Economic Stability Act (PROMESA). The law, signed by former President Barack Obama, gave the island an alternative because, as a territory, it could not file under Chapter 9, the traditional avenue for financially distressed municipalities.

The year before, the island failed to comply with payments on $70 billion in public debt and more than $50 billion in pension obligations. The pension portion of the debt will not be restructured which means every pensioner is supposed to received what they were promised.

Puerto Ricos debt is unpayable, said former Gov. Alejandro Garca-Padilla in 2015. Under his administration and President Obamas last term, PROMESA was imposed, including its Financial Oversight and Management Board.

The board, made up of seven members, is in charge of handling the islands finances and has received criticism from residents, local and federal officials amid the delay in reaching a consensus that would lead Puerto Rico out of the bankruptcy.

In a statement announcing her departure, effective in April, Jaresko touted her achievements during her tenure.

I am leaving the Oversight Board at a time of recovery and stability. I am proud of what we have achieved, and I am confident that the road that led us to this milestone will take Puerto Rico further to growth and prosperity, Jaresko said in a statement.

The board's chair, David Skeel, lauded her work.

I am saddened by her personal decision to step back but I also understand her desire for a change after five years of rewarding but relentless and difficult work to help Puerto Rico recover from its fiscal and economic crisis," Skeel said.

Jaresko acknowledged, however, "these have been complex years, and the painful natural disasters, political turmoil, and the pandemic added to the hurdles we needed to overcome,"

Months after the board started working on the island, Puerto Rico was slammed by Hurricane Irma and Mara causing over $90 billion in losses, according to the local government.

Three years later the island got hit again with thousands of earthquakes and the ongoing pandemic debilitating Puerto Ricos economy even more.

Natalie Jaresko the executive director of the board is speaks on a public hearing on May 27,2021 at San Juan, Puerto Rico.

Whats next for the island?

Puerto Rico will have to start paying the debt with the hope that the islands economy will grow independently from the federal aid that is expected to arrive.

Its a leap of faith, Marxuach, from the Center for the New Economy, told ABC News.

It's a big concern for us, that once this money dries up, we really don't have a, you know, strategic vision, as you know, for growing the economy. And we may go back into a recession, Marxuach added.

Although many experts are aware the agreement is not perfect and risky, they considered it a step forward in getting Puerto Rico out of the financial crisis.

Under the approved plan, pension obligations were protected, securing many retirees that were fearful of their economic stability.

I think the positive side of this restructuring was that pensions were protected and I think that's a big win for the civil society of Puerto Rico, Caraballo-Cueto told ABC News.

Although he is in favor of fully protecting pensions, Marxuach is concerned what protecting pensions means for the ability to invest in younger generations.

Protecting the pensions was a good thing but I think about the amount we're going to be paying on pensions every year going forward, which is about $2 billion and think then think about the amount we're going to be putting from the general fund into the University of Puerto Rico, which is only $500 million, Marxuach says.

As Puerto Rico heads into a new phase of the bankruptcy process, experts are warning that this is just the beginning.

We're turning the corner and things are starting to look better, but we still have a lot of work to do, Marxuach said.

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Puerto Rico may be nearing the end of bankruptcy. What does this mean? - ABC News

Australia: One-year bankruptcy is back on the table

06 February 2022

Worrells Solvency & Forensic Accountants

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You may recall that way back in October 2017 the governmentintroduced the Bankruptcy Amendment (Enterprise Incentives)Bill to amend the Bankruptcy Act 1966 toreduce the automatic bankruptcy period from three years to oneyear. The Bill lapsed in 2019 but was still floating around thehalls of government and the Attorney-General has put it back on thetable by seeking submissions to reform the Bankruptcy Act inrelation to:

However, it is not all plain sailing for those facingbankruptcy! The government is particularly interested in gettingstakeholders thoughts on excluding bankrupts from being eligiblefor a one-year bankruptcy where in the last 10 years they have:

Been bankrupt

This is proposed to be staged such that if the reform becomeseffective and you've already had a one-year bankruptcy in a10-year period, then any future bankruptcy will be two years. Ifyou go bankrupt again in the next 10 years, then it will be threeyears. After that (hopefully very few get to that!) it resets toone year.

Been banned as a director

No staging here; the bankruptcy is automatically three years.However, those automatically banned as a result of going bankruptget the one, two, or three years outlined above.

Had a bankruptcy extended through an objection todischarge

So, if you had been bankrupt in the last 10 years and thebankruptcy trustee objected to your automatic discharge frombankruptcy, then you're not entitled to the one-yearbankruptcy.

Have been convicted of certain offences

If you had been convicted of a Bankruptcy Act or fraud-relatedoffence you are straight to the maximum three years.

Promoting debt agreements & targeting untrustworthyadvisors

The government is concerned about the reduction in Part IX, debtagreements use. National volumes reduced from 11,549 in the 2018-19period, to 3,731 in the 2020-21 period. No doubt some of thereduction has been as a result of the government's and majorlender's financial responses to the pandemic. However, sincethe numbers have not materially increased, consideration is beinggiven to:

In an effort to further detect and stamp out pre-insolvencyadvice by untrustworthy advisors the Attorney-General is seekingstakeholder views on expanding the Bankruptcy Act to:

Details of the consultation can be found here, with submissions closing on 25 February2022.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

POPULAR ARTICLES ON: Insolvency/Bankruptcy/Re-structuring from Australia

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One-year bankruptcy is back on the table - Insolvency/Bankruptcy/Re-structuring - Australia - Mondaq News Alerts