Archives: EME & Asia Bankruptcy & Commercial Restructuring

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Wrongful Trading: Robin Hood’s not-so Merry Men

Brooks and another v Armstrong and another [2015] EWHC 2289 (Ch) In a rare judgment considering wrongful trading in detail, the memorably-named “Robin Hood” case considers at which point the directors ought to have known that there was no reasonable prospect that the company would avoid going into insolvent liquidation. It also reiterates that the … Continue Reading

Prohibitions on Restrictions to Assignment of Receivables

Many businesses assign or charge their receivables in order to obtain finance, and in many cases, to improve cashflow. Following the financial crisis of 2008, alternatives to bank-led finance have been sought by businesses, with the government making efforts to facilitate access to alternative finance. Commercial contracts often contain provisions prohibiting the assignment of payment … Continue Reading

Brazil, bribes and backward tracing – only in Jersey

The Municipality of Sao Paulo and the Republic of Brazil successfully defeated an appeal from two BVI registered companies to the Privy Council which considered what the circumstances are, if any, where backward tracing would be permitted. Background The two appellants, “Durant” and “Kildare” are BVI registered companies, which were controlled by Mr Paulo Maluf … Continue Reading

Section 236 of the UK Insolvency Act 1986 – extra-territorial effect?

The English High Court rejects an application by the Joint Special Administrators of MF Global UK Limited (“MF Global”) for an order seeking the production of documents pursuant to section 236 of the Insolvency Act 1986 (the “Act”). In doing so, Mr Justice David Richards rules that section 236 of the Act does not have … Continue Reading

French Supreme Court rules out liability for undercapitalising companies

In this article, Anker Sorensen, a senior partner of the Financial Industry Group of Reed Smith in Paris, practicing predominantly in the area of Corporate and Restructuring, discusses two recent decisions rendered by the Commercial chamber of the French Supreme Court. One of the decisions seems to set a standard for the lower courts when … Continue Reading

English schemes of arrangement: some practical advice for proponents

Van Gansewinkel Groep BV, Re [2015] EWHC 2151 (Ch) In what appears to be a growing trend, the High Court in England has sanctioned another scheme of arrangement involving non-English companies. Last week’s judgment from Mr Justice Snowden joins an ever growing number of decisions by the English courts to sanction schemes where debtors do … Continue Reading

The UK continues its objective stance on rescue procedures

The High Court has considered whether a winding-up petition is permitted where the Petitioner has a collateral purpose for bringing the petition. The collateral purpose, also referred to as an ulterior motive, would result in the Petitioner making a gain, financial or otherwise, from bringing the petition. The court found that in the event that … Continue Reading

Forum shopping – the end of an era?

Introduction On 20 May 2015 the European Parliament adopted the recast Insolvency Regulation (the “Recast Regulation”) amending the existing Council Regulation (EC) (No. 1346/2000) on Insolvency Proceedings (the “Regulations”). Amongst the changes implemented by the Recast Regulation is the incorporation of a definition of centre of main interest (“COMI”). A company’s COMI is important from … Continue Reading

Dutch company, New York law – an English scheme of arrangement?

DTEK Finance B.V., Re [2015] EWHC 1164 (Ch) Following upon the November judgment in Re APCOA Parking Holdings GmbH, last week Mrs. Justice Rose sanctioned a scheme of arrangement between DTEK Finance B.V. (“DTEK“), a Dutch company, and holders of notes issued by DTEK in 2010 (the “Notes“). Notably, this case reinforces the finding in … Continue Reading

Supreme Court considers place of “establishment” in Olympic Airlines appeal

Trustees of Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA [2015] UKSC 27 The Supreme Court was unanimous in its brief judgment, found here, that for the purpose of establishing secondary proceedings, Olympic Airlines did not have their place of “establishment” in the United Kingdom. Facts Olympic Airlines SA, the respondent, … Continue Reading

The Macron Bill about to introduce a right to remove shareholders of distressed companies: a new threat for investors or new opportunities for creditors of French companies in need of turnaround?

In its 2014 insolvency reforms, the French Government contemplated allowing a French Commercial Court (Tribunal de commerce), faced with a company under judicial reorganisation (redressement judiciaire), to remove that company’s shareholders. In the end, the Government did not include such proposal in the 2014 legislation for fear that the French Constitutional Court (Conseil Constitutionnel) would … Continue Reading

The Versailles Court of Appeal Fine-Tunes the Duty of Loyalty Owed by Managing Directors

A Managing Director of a French Société Anonyme has a statutory duty of loyalty towards the shareholders of such company. This principle was set in stone by a ruling of the French Supreme Court (Cour de cassation) in 1996. It has further been ruled that under this duty, a Managing Director (“MD”) must inform the … Continue Reading

Developments in the insolvency world – The Small Business, Enterprise and Employment Bill

The Small Business, Enterprise and Employment Act (the Act) recently received Royal Assent. The Act introduces a number of new provisions across a wide range of issues, including regulatory reform, public sector procurement and companies. In relation to the insolvency and restructuring sector, there are a number of provisions which are likely to garner significant … Continue Reading

Recent Insolvency Developments

The Ministry of Justice announced last Thursday that the insolvency exemption to the Jackson Reforms has been indefinitely extended. This means that office-holders are able to continue to operate on conditional fee arrangements, recovering success fees from the losing party and with after the event insurance premiums remaining recoverable from the losing party. See our … Continue Reading

Continuity of supply of essential services to be guaranteed during business recovery (UK update)

Following a consultation on the issues last year, an Order was laid before the UK Parliament on Monday (9 February 2015) to prevent suppliers of water, gas, electricity, communications services and IT from cutting off supply or charging premium rates while insolvency practitioners seek a viable solution to rescue a business. The new rules were … Continue Reading

February Newsletter

Reed Smith’s global Commercial Restructuring & Bankruptcy team have recently published the February Edition of their quarterly newsletter. The newsletter provides a detailed review of some of the most important legal developments in the sector.  The February issue includes the following: Minority Holders Gain Leverage Through Recent Interpretation of Trust Indenture Act New Jersey Joins Number … Continue Reading

A Cautionary Tale: Companies House owes a duty of care when registering winding up orders

In Sebry v Companies House and The Registrar of Companies, it was recently held that Companies House owes a duty of care when entering a winding up order (“Order”) on the Register of Companies. This duty is owed ‘to any Company which is not in liquidation but which is wrongly recorded on the register as … Continue Reading

New class of secondary preferential creditors created

Legislation has come into effect to create a new class of debt in insolvency, being “secondary preferential debts”. Secondary preferential debts are, in brief, those parts of a deposit which do not fall within the protection of the Financial Services Compensation Scheme (“FSCS”). Typically, parts of a deposit might fall outside of the FSCS because … Continue Reading

Storms gathering for restructuring of group entities underscore need for up-to-date advice

In this article, the author Anker Sorensen, a senior partner of the Financial Industry Group of Reed Smith Paris, practising predominantly in the area of Corporate and Restructuring, sets out various recent labor related reforms applicable in France in 2014 and discusses recent court decisions, which may deter investors, and particularly foreign investors, instead of … Continue Reading

Privy Council hands down judgment in PwC v Saad Investments Company and Singularis Holdings v PwC

Singularis Holdings Limited v PricewaterhouseCoopers [2014] UKPC 36 PricewaterhouseCoopers v Saad Investments Company Limited [2014] UKPC 35 The Privy Council gives credence to the concept of “modified universalism” (being the court’s common law power to assist foreign winding up proceedings) and notes some of the circumstances which would permit a “stranger” to a winding up … Continue Reading

Debt-equity-swaps under the German “Schutzschirmverfahren” – quite comfortable?

This post was also written by Artur Korn. German insolvency law, unlike US insolvency law, only recently introduced (in 2012) the so-called protective shield proceedings (Schutzschirmverfahren) to enable potentially illiquid and/or over-indebted debtors to restructure the company on the basis of a so-called insolvency plan. Thereby, the liquidation of a company by a future insolvency … Continue Reading

Is there a need to reform the contestation right of an insolvency administrator in the case of wilful disadvantage to other creditors (Vorsatzanfechtung) under German Insolvency law?

This post was also written by Artur Korn. If you are a creditor of an insolvent German company, you may have come across the following difficult phenomenon: your contractual counterparty is unable to pay outstanding debts when they become due. In order to maintain the business relationship you could agree to terms of payment entitling … Continue Reading

October Newsletter

Reed Smith’s global Commercial Restructuring & Bankruptcy team have recently published the October Edition  of their quarterly newsletter.  The newsletter provides a detailed review of some of the most important legal developments in the sector.  The October edition covers diverse areas from the use of schemes of arrangements in England to attorney-client privilege issues in … Continue Reading