Cambridge Gas Resuscitated – Farewell Rubin and Singularis?
On September 19, 2018 UNCITRAL published the final text of its new Model Law on Recognition and Enforcement of Insolvency-Related Judgments.
The working group considered the arrested development of the concept of modified universalism following the UK Supreme Court (“UKSC”) judgments in Rubin v Eurofinance SA [2013] 1 AC 236 which overturned a previous decision of the Judicial Committee of the Privy Council (“JCPC”) in Cambridge Gas v Navigator Holdings on appeal from the Isle of Man. Continue Reading
Approval of third-party releases under the CCAA: the court lowers the bar in Aquadis
Posted in Canada
A monitor appointed under the Companies’ Creditors Arrangement Act (CCAA) may commence a claim against third parties in the name of the debtor. The purpose of such a claim is obviously to maximize the value of the debtor’s assets for the benefit of its creditors.
In the event the monitor settles a claim with some of the defendants, the latter will usually insist on obtaining a full and complete court-approved release. Courts will generally approve the release if it is fair and reasonable in the circumstances and if the rights (both procedural and substantive) of the non-settling defendants are protected.
In a recent decision, the bar for approving a third-party release was, however, significantly lowered. In the matter of Aquadis,* the court indeed approved a settlement agreement (i) granting release to defendants who did not contribute to the settlement, (ii) offering no procedural protection to the non-settling parties, and (iii) offering very limited protection to the substantive rights of the non-settling parties. Continue Reading
“No Deal Brexit” and cross-border insolvency cases in the EU
Posted in Europe
On 13 September 2018 the UK Government published a briefing on the likely response post exit of the UK to cases which currently fall within the Recast EU Insolvency Regulation (2105/848) (“Regulation”)
The full text of its proposal for insolvency cases is as follows:
Cross-border insolvency cooperation
The majority of the Insolvency Regulation, which covers the jurisdictional rules, applicable law and recognition of cross-border insolvency proceedings, would be repealed in all parts of the UK. We would retain the EU rules that provide for the UK courts to have jurisdiction where a company or individual is based in the UK, and the law will ensure that insolvency proceedings can continue to be opened in those circumstances. But after exit, the EU Insolvency Regulation tests would no longer restrict the opening of proceedings, and so it would also be possible to open insolvency proceedings under any of the tests set out in our domestic UK law, regardless of whether (or where) the debtor is based elsewhere in Europe. Continue Reading
Eleventh Circuit rules doctrine of equitable mootness applies in chapter 9
Posted in U.S.
On August 16, 2018, the United States Court of Appeals for the Eleventh Circuit issued an opinion in the chapter 9 case of Jefferson County, Alabama, reversing the decision of the District Court and ruling that the doctrine of equitable mootness applies in municipal bankruptcies.
In Jefferson County’s chapter 9 case, the bankruptcy court confirmed the County’s chapter 9 plan over the objection of a group of sewer ratepayers, which provided for the issuance of approximately $1.8 billion of new sewer warrants with maturities that ranged up to 40 years. The chapter 9 plan included a provision that the bankruptcy court would retain jurisdiction throughout the life of the new sewer warrants to enforce a covenant that the county must raise sewer rates in sufficient amounts to cover debt service of the new sewer warrants. On December 1, 2013, two days before the effective date of the chapter 9 plan, the ratepayers filed a notice of appeal to the District Court but did not file a stay pending appeal or request that the appeal be expedited. On Dec. 3, 2013, pursuant to the bankruptcy court’s confirmation order, the County issued the new sewer warrants and creditors received distributions on their prepetition claims.
Chapter 15 does not provide back door for appeals of confirmed foreign restructuring plans
Posted in U.S.
It is common for a foreign debtor with assets or other connections to the U.S. to request an order enforcing its restructuring plan in the U.S. under Chapter 15 of the Bankruptcy Code. U.S. courts will generally grant comity to a foreign plan if it has been confirmed by a foreign court with jurisdiction and enforcement of that plan in the U.S. would not prejudice the rights of U.S. citizens or otherwise violate domestic public policy. Resolution of all appeals in the foreign jurisdiction is not a pre-requisite to enforcement of that plan by the U.S. court under Chapter 15. See In re Oi S.A., Case No. 16-11791 (Bankr. S.D.N.Y. July 9, 2018). Continue Reading
Australian law reform: the new ‘safe harbour’ for directors and stay on enforcement of ‘ipso facto’ clauses
Posted in Australia
Australian insolvency laws recently underwent the most comprehensive review and reform since the early 1990s. Part of those reforms included the introduction of:
* a ‘safe harbour’ for directors in respect of the insolvent trading offence; and
* a stay on the exercise of certain rights (including termination rights) for counterparties (or ‘ipso facto’ clauses).
The New ‘Safe Harbour’ for Directors
Directors of Australian companies are liable for any debts incurred while the company is, or is likely to become, insolvent. The reforms introduce a safe harbour for directors to somewhat temper the onerous insolvent trading provisions. Continue Reading
In a 5-4 decision, SCOTUS levels the retail playing field
Posted in U.S.
Brick and mortar retail businesses have been experiencing financial distress, with retail defaults at an all time high. In 2018 alone, there have been over a dozen retailers filing for bankruptcy protection, several of which, including Toys “R” Us and The Bon-Ton Stores, have been forced to liquidate. However, while many traditional “mall tenants” and other brick and mortar retailers have been struggling, online retailers have been flourishing. The convenience and speed of online retail, coupled with ongoing advances in technology and delivery distribution capabilities, have led to a consistent increase in e-commerce customers. Further fueling the divide between e-commerce retail success and brick and mortar retail failure has been the different tax obligations imposed against each group. Specifically, brick and mortar retailers are required to collect and remit sales tax, which currently exists in 41 states, while online retailers have largely been exempt from this requirement. In today’s highly competitive market, this taxing requirement has placed traditional retailers at a significant pricing disadvantage compared to e-commerce retailers. Continue Reading
AAT approves registered liquidator application of non-resident and provides important clarification in respect of the new registration regime
Posted in Australia
Norton Rose Fulbright represented Mitchell Mansfield, an Australian citizen but who now resides in and works in Singapore, of Borelli Walsh in a successful appeal before the Administrative Appeals Tribunal (AAT) in relation to his application for registration as a liquidator.
The appeal raises significant issues about the new statutory regime for the registration of liquidators following the reforms introduced by the Insolvency Law Reform Act 2016 (Cth) (ILRA) and is the first case before the AAT where the operation of the new regime has been considered. Deputy President J Redfern (Redfern DP) handed down her decision and reasons for decision on 5 June 2018.
New statutory scheme for registration of liquidators
Pursuant to the reforms introduced by ILRA, an applicant seeking to become a registered liquidator is required to apply to the Australian Securities and Investments Commission (ASIC). ASIC in turn refers the application to a specially convened committee (Committee) under section 20-10 of the Insolvency Practice Schedule (Corporations) (Corporations Schedule) for determination of the application against criteria specified in subsection 20-20(4) of the Corporations Schedule.
The Committee is comprised of a delegate of ASIC, a registered liquidator chosen by the Australian Restructuring Insolvency and Turnaround Association (ARITA) and an appointee of the Minister for Revenue and Financial Services. The Insolvency Practice Rules (Corporations) 2016 (Cth) (Corporations Rules) prescribe the standard of qualifications, experience, knowledge and abilities required for the purposes of 20-20(4)(a) of the Corporations Schedule. Continue Reading
AAT approves application of non-resident insolvency practitioner to become a registered liquidator
Posted in AustraliaPartner Scott Atkins and senior associate Jonathon Turner acted for Mitchell Mansfield of Borelli Walsh Singapore in a successful appeal before the Administrative Appeals Tribunal (AAT) in relation to an application under the new statutory scheme for registration as a liquidator. Reasons for the decision were handed down on Tuesday.
The appeal raises significant issues about the new regime following the reforms introduced by the Insolvency Law Reform Act 2016, and is the first case before the AAT where the operation of the new regime has been considered.
We will be releasing a comprehensive analysis of the decision shortly.
Republic of Myanmar: new insolvency and restructuring laws
Posted in Australia
Sydney-based Financial Restructuring and Insolvency Partners of Norton Rose Fulbright, Scott Atkins and John Martin, together with Special Counsel Rodney Bretag, are close to finalising a new insolvency and restructuring law for the Republic of Myanmar.
The team from NRF are working with the Asian Development Bank and the Union Supreme Court. Their work is focussed upon strengthening and modernising the legal and institutional framework of Myanmar’s insolvency and restructuring regime as well as undertaking associated capacity development of institutions and the legal and accounting professions to support the introduction of the new laws. The overarching objective is to create a platform that matches not only the present circumstances with Myanmar’s broader legal and commercial systems, but is also sophisticated enough to maintain its relevance into the future as Myanmar’s economy develops.