In the recent case of Kevin Taylor v Van Dutch Marine Holding Ltd and others, the UK High Court decided that the exercise of existing rights by a secured creditor should not be regarded as a disposal by a defendant, and as a result, enforcement by a secured creditor is not an infringement of a freezing order. The High Court also clarified that it is not necessary for a secured creditor to bring an application for variation of the freezing order.
On 13 July 2017 the High Court gave its judgment in UBS AG, London Branch v. GLAS Trust Corporation Limited  EWHC 1788 (Comm), a case brought by UBS against the trustee for notes issued as part of a securitisation transaction by Fairhold Securitisation Limited (the “Issuer“). UBS disputed the ability of the trustee to absorb costs incurred by a group of noteholders pursuing a potential restructuring of the debt. The case will be of interest to trustees, investors and other stakeholders involved in the restructuring of finance transactions involving a trustee. The case provides some useful guidance on the test to be applied in determining whether expenses of a trustee have been “properly incurred“. Continue Reading Paying for a debt restructuring – can costs be adopted by the Trustee?
Despite a modest uptick in recent years, it is still a relatively rare occasion for the Supreme Court of the United States to tackle issues involving bankruptcy. This term, however, the Supreme Court has granted certiorari in two bankruptcy appeals that could have important consequences for the financial community. In FTI Consulting, Inc. v. Merit Management Group, LP, the Court will define the parameters of the safe harbor of Bankruptcy Code section 546(e), which excludes certain financial transactions from the debtor’s avoidance powers. In PEM Entities LLC v. Levin, the Court will also determine whether federal or state law should apply when analyzing whether debt should be recharacterized as equity. Both cases could alter how financial transactions are structured and documented.
This article first appeared in the Summer 2017 edition of Recovery Magazine and is published here with their kind permission.
The Companies Act scheme of arrangement – now set out in part 26 of the Companies Act 2006 (CA 2006), has come a long way. Long gone are the times when schemes of arrangement – never an Insolvency Act process – were merely seen as tools for implementing solvent reorganisations. Schemes of arrangement are nowadays one of the most favoured means for rescheduling, reorganising or otherwise compromising the liability of companies to their creditors in complex multijurisdictional restructurings.
English schemes are popular because of the breadth and flexibility of the legislative provisions and their low jurisdictional threshold. Additionally, the courts take a robust and pragmatic approach to the proponents and opponents of the part 26 process. This article summarises four examples of that pragmatism in action. Click here to read the full article.
In the recent case of Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed), the Western Australian Supreme Court has confirmed that the grant of a security interest under the Personal Property Securities Act 2009 (PPSA) by a company to a third party will likely render any rights of set-off enjoyed by the company’s contractual counterparties worthless where the company subsequently enters liquidation.
The PPSA is a relatively new legislative regime in Australia, and applies to a wide range of “in substance” security interests over most types of property other than land. The decision is significant, because it represents the first time an Australian Court has conducted a detailed analysis as to the interplay between security interests granted under the PPSA and statutory rights of set-off applicable in insolvency.
  WASC (2 June 2017)
Der Wert der Insolvenzmasse ist Berechnungsgrundlage sowohl für die Vergütung des Insolvenzverwalters als auch die Gerichtsgebühr im Insolvenzverfahren. Obwohl die Regelungen hierzu gleich lauten, legt sie das OLG München unterschiedlich aus. Die Folge im aktuellen Fall ist eine knapp sechsfach höhere Bemessungsgrundlage zugunsten der Gerichtskasse. Die Mehrheit der Oberlandesgerichte teilt diese Sichtweise nicht. Damit begründet die Rechtsprechung des OLG München einen deutlichen Standortnachteil für Betriebsfortführungen im Insolvenzverfahren im Bezirk des Oberlandesgerichts München. Diese Rechtsprechung kann weiter gedacht dazu führen, dass der Verwalter bei einem margenschwachen Geschäft den Betrieb einstellen muss, um nicht durch die Begründung hoher Gerichtskosten die Bezahlung der sonstigen Masseverbindlichkeiten zu gefährden.
In order to promote a “rescue culture”, the Transfer of Undertakings (Protection of Employment) Regulations 2006 – better known as TUPE – says that where the transferring business is the subject of bankruptcy or insolvency proceedings instituted “with a view to the liquidation of the assets of the transferor”, the employees will not transfer and any dismissals connected with the transfer are not automatically unfair.
The wording of this insolvency exemption is contained in the European Acquired Rights Directive from which TUPE is derived. In Federatie Nederlandse Vakvereniging v Smallsteps BV the European Court was asked to decide if a pre-pack sale – designed to prepare the business transfer in advance so as to allow a swift re-launch once the insolvency had been declared – fell within this exemption. The decision was published on 22 June, click here to read our note on the case.
The Singapore Companies Act (Amendment) Act 2017 (the ”Act”) significantly overhauls Singapore’s corporate rescue and restructuring framework. In doing so, Singapore has adopted a number of key features from Chapter 11 of the US Bankruptcy Code. This client alert highlights the main amendments of the Act that corporate debtors, lenders and distressed investors should be aware of. In particular the Act now provides:
1. better accessibility to Singapore’s corporate rescue and restructuring framework for foreign companies;
2. US Chapter 11 style rescue/DIP financing;
3. enhanced moratoriums with extra territorial effect;
4. increased disclosure, cram-downs and prepacks; and
5. for the adoption of UNCITRAL Model Law.
There is no doubt that the introduction of this Act greatly improves the legal framework for debt restructurings in Singapore. We envisage that this Act will put Singapore firmly on the map as a key centre for international debt restructurings providing debtors, lenders, alternative capital providers and distressed investors access to internationally recognised and highly familiar restructuring tools and techniques. The amendments discussed in this client alert came into effect on 23 May 2017. Read our alert, Singapore Insolvency and Restructuring Reforms
In one of the most significant decisions relating to schemes of arrangement in Australia in recent years, the New South Wales Court of Appeal has dismissed an appeal challenging the composition of classes of creditors in the Boart Longyear restructuring.
The decision significantly widens the extent to which creditors within the same voting class may be treated differently, both in terms of their existing rights and their rights under the proposed scheme. As a result, the decision may lead to greater flexibility for stakeholders and distressed companies seeking to devise restructuring plans via scheme of arrangement. Continue Reading New South Wales Court of Appeal upholds Boart Longyear scheme classes decision