The following Restructuring & Insolvency practice note Produced in partnership with Julie Lanz of Skadden Arps Slate Meagher & Flom LLP provides comprehensive and up to date legal information covering:
The purpose of chapter 7 of the US Bankruptcy Code is prompt liquidation of a debtor company’s assets. Unlike chapter 11, which is intended to provide a company with the opportunity restructure its liabilities and emerge from bankruptcy as a going concern (see Practice Note: The US chapter 11 process), chapter 7 is intended only for winding down a company’s business and liquidating its assets. Also unlike chapter 11, where incumbent management and directors typically remain in control of the business and reorganisation process, in chapter 7 a trustee is appointed to oversee the liquidation. While there are also ‘liquidating chapter 11’ cases, where the debtor’s existing management remains in control and oversees the liquidation process, these are less common.
Chapter 7 typically results in immediate cessation of business operations and loss of going concern value and employees, followed by an often disorderly and piecemeal liquidation of business assets and litigation claims.
Secured creditor recoveries and the value of their collateral may be substantially impaired in a chapter 7 case.
A chapter 7 case may be commenced voluntarily by a debtor upon the debtor’s filing of a petition in the bankruptcy court (US Bankruptcy Code, s 301), or involuntarily by three petitioning unsecured creditors with non-contingent claims not subject to bona fide dispute if the debtor is generally not paying its
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This Practice Note considers the different categories of contractual damages that may be available for financial loss (pecuniary loss), ie expectation-based damages, reliance-based damages and gains-based damages.For guidance on contractual damages generally, see Practice Note: Contractual
You may apply simplified customer due diligence (SDD) measures in relation to particular business relationships or transactions which you determine present a low risk of money laundering or terrorist financing, having taken into account:•your organisation-wide risk assessment—see Practice Note:
Who is a fiduciary?There is no comprehensive list of the relationships which give rise to the existence of fiduciary duties under common law. Some relationships are automatically fiduciary, eg those between trustee and beneficiary, solicitor and client, principal and agent, business partner and
Having established that a duty of care exists (see Practice Note: Negligence—when does a duty of care arise?), it is then necessary to consider whether or not there has been a breach of that duty. This will depend on a number of factors outlined below and considered against the general background of
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