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Avoiding the Voidable Assessing Global Insolvency Practices and Processes

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Avoiding the Voidable Assessing Global Insolvency Practices and Processes Avoiding the Voidable Assessing global insolvency practices and processes Virtual Round Table Series Insolvency Working Group 2017 Virtual Series | Avoiding the Voidable Avoiding the Voidable Assessing global insolvency practices and processes Insolvency can be a complex business, particularly where IR Global brought six members of its Insolvency Group to- disputes arise among creditors around the nature and val- gether to discuss voidable transactions as part of the Virtu- ue of what they are owed from the recorded assets of the al Series collaborations. The following discussion will iden- insolvent company. tify the most common voidable transactions across various jurisdictions and demonstrate how the various insolvency It can become even more complex still where historical laws deal with the evidentiary process behind voiding. payments or transfers pre-dating the insolvency process are called into question as invalid. In the interests of pre- We will also look at the use of mediation as an alternative serving value for legitimate creditors, insolvency practition- to litigation and consider the defences recipient parties ers or bankruptcy trustees have the option of attempting can use against any future voiding action. to avoid specific transactions and recoup the monies or The following discussion involves IR Global members from assets transferred out of the business or estate. the USA (Illinois and Washington D.C.), England, Germany, India and Slovenia. The View from IR Thomas Wheeler MANAGING DIRECTOR Our Virtual Series publications bring together a number Each discussion features just one representative per ju- of the network’s members to discuss a different practice risdiction, with the subject matter chosen by the steering area-related topic. The participants share their expertise committee of the relevant working group. The goal is to and offer a unique perspective from the jurisdiction they provide insight into challenges and opportunities identified operate in. by specialist practitioners. This initiative highlights the emphasis we place on collab- We firmly believe the power of a global network comes oration within the IR Global community and the need for from sharing ideas and expertise, enabling our members effective knowledge sharing. to better serve their clients’ international needs. irglobal.com | page 3 UK GERMANY INDIA David Foster Gabriele Hucklenbruch Nikhil Palli Partner, Barlow Robbins Partner, Franz Legal Partner, Palli Law Phone: +44 1483 464243 Phone: +49 171 86 46 884 Phone: +91 981 167 6973 Email: [email protected] Email: [email protected] Email: [email protected] David is the Head of Dispute Resolution at Bar- Gabriele is head of the practice group Crisis Nikhil completed his Masters in Law from the low Robbins, a leading UK law firm. His areas of Management. A main focus of her work is the University of London and is a fifth generation practice include professional negligence, com- legal consultation of business partners, share- lawyer in the Palli family. He manages a team mercial litigation, insolvency, property disputes holders and organs of insolvent companies or of more than twenty professionals based out of and inheritance disputes. companies on the brink of insolvency – preven- Palli Law’s head office in New Delhi and sister tively as well as in disputes with an insolvency offices in Mumbai, Chandigarh and Pune. David regularly handles cases in the higher administrator. courts for clients of all sizes, including banks, Palli Law strives to achieve the milestones em- insurers and educational institutions. He has Insolvency related issues are also part of her bedded upon the firm’s professional path with handled more than 200 mediations across the services for financing companies who she has utmost sincerity, honesty and hard work. UK with a success rate of over 90%. advised for more than 17 years and serves to- gether with her team as an outsourced legal He has wide mediation experience, lecturing department. Gabriele is fully conversant with on mediation in Kenya and is a member of the all issues concerning market and purchase fi- Commercial Litigation Association, the Profes- nancing, which is a focus of her banking and sional Negligence Lawyers’ Association and the financial law business. She also has many years International Bar Association. of trial experience and contract law knowledge. He is also a member of the standing conference Gabriele gives regular lectures on these sub- of Mediation Advocates and a mediator mem- jects and is the author of diverse legal publica- ber of a number of mediation groups including tion articles. the ADR Group, Expedite Resolution and Law South Mediators. He is actively involved in a She was recently honored with the Award ‘Hid- number of charities and organisations, includ- den Champion Contract Law 2016-2017.’ The ing as trustee. award is the result of a study initiated by the German Federal Association of In-House Law- A recent independent guide to the UK Legal yers which was designed to facilitate an over- Profession named him as a ‘very good lawyer’ view of the legal market. who ‘gets down to the heart of an issue’. Karen Schuman, Counsel of 1 Chancery Lane said that David has a ‘calm authority’ and can ‘find the solution’ in a difficult case. irglobal.com | page 3 Virtual Series | Avoiding the Voidable US - ILLINOIS US - WASHINGTON DC SLOVENIA Bob Fishman Jeffrey Liesemer Uros Ilic Member, Shaw, Fishman, Member, Managing Partner, Glantz & Towbin LLC Caplin & Drysdale ODI Phone: +1 312 541 0151 Phone: +1 202 862 5007 Phone: +386 590 86 600 Email: [email protected] Email: [email protected] Email: [email protected] As co-chair of the Bankruptcy, Reorganisation Jeff focuses his practice on complex business Uros is the founder and principal of ODI and and Creditors Rights practice of Shaw Fishman, reorganizations, cross-border insolvencies, the sole attorney-at-law in Slovenia with the title Bob’s focus is resolving his clients’ difficult- fi creditors’ rights, and commercial litigation. He ‘specialist in corporate and insolvency law’. nancial issues. advocates for his clients at the trial and appel- late levels of both state and federal courts. In 2004, he acquired the title ‘Trustee in Pro- Whether representing a debtor or creditor, ceedings of Compulsory Compositions, Bank- through an informal out-of-court workout or Jeff has broad experience advising and repre- ruptcies and Liquidations’. He has profound ex- through the bankruptcy process, he partners senting business debtors, secured and unse- perience in the fields of financial and business with his clients to find the most efficient and cured creditors, creditors’ committees, shop- restructuring, corporate and insolvency law. As beneficial solution for their situation. ping-center landlords, and other interested an experienced practitioner he has participated parties in large chapter 11 reorganizations and He has represented clients in numerous indus- in all aspects of the bankruptcy and insolvency liquidations. tries including health care, telecommunications, process and serves as the president of the or- manufacturing, real estate, retail, transportation, He has also defended clients in avoidance or ganising committee for The Slovenian Days of and financial services. An experienced practi- “claw-back” proceedings to recover alleged Insolvency Law. tioner, Bob has participated in all aspects of the preferential transfers and fraudulent convey- One of his latest professional contributions to bankruptcy process. He has represented trus- ances. Jeff has been involved in a number of the legislative procedure of Slovenia was on the tees, debtors, creditors’ and equity committees, notable bankruptcies throughout the United Amendment Act to the Financial Operations, secured and unsecured creditors, purchasers of States, including W.R. Grace & Co., Pittsburgh Insolvency Proceedings and Compulsory Dis- assets, and litigants in adversary proceedings. Corning, G-I Holdings (formerly GAF Corpora- solution Act. tion), Chemtura Corporation, Garlock Sealing Bankruptcy Mediation has become a very signif- Technologies, Durabla Manufacturing, and Es- He is the author of numerous articles on corpo- icant part of Bob’s practice. He was appointed sar Steel. rate law and insolvency matters and an external the Special Mediator in the Lauth Investment lecturer at the Faculty of Law in Ljubljana. He is Properties, LLC (IN) case and successfully as- Jeff earned his Bachelor of Arts summa cum also an active speaker at conferences, sympo- sisted the parties therein in reaching a global laude from Bucknell University and his Juris sia and roundtable discussions designated to settlement that allowed for the confirmation of a Doctor magna cum laude from the University of educate judges, attorneys and in-house coun- Chapter 11 plan of reorganisation. Pittsburgh School of Law, where he was a mem- sels. ber of the Order of the Coif and managing editor of the University of Pittsburgh Law Review. irglobal.com | page 5 QUESTION 1 US –Jeffrey Liesemer (JL) Preferential and fraudulent transfers are the most common voidable transactions in What are the most common my jurisdiction. The US Bankruptcy Code defines a pref- erential transfer as a transfer of the debtor’s property, in- voidable transactions in cluding cash, to a creditor, on account of a pre-existing debt, and made within 90 days of the bankruptcy filing. your jurisdiction? Moreover, to be a preference, the transfer must enable
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