On April 19, 2023, the US Supreme Court unanimously held that Section 363(m) of the Bankruptcy Code is not “jurisdictional,” and therefore does not limit a court’s authority to hear an appeal of a bankruptcy sale order (even if it does limit a court’s ability to void the sale itself). This ruling resolves a circuit split and continues the courtroom saga of Sears Roebuck & Company, despite the company having emerged from bankruptcy in November 2022. Sears, a one-time stalwart of malls across the United States and leading retailer of merchandise, appliances, tools, electronics, and other goo ..read more

INSOL International’s latest news update discusses a decision by a court in the Southern District of New York finding that a Cayman Islands liquidation under Section 92(e) of the Companies Act is not a foreign proceeding that can be recognized under Chapter 15 of the US Bankruptcy Code. View the article ..read more

Our global restructuring team has released its quarterly International Restructuring Newswire. Our new issue features articles from Hong Kong, Australia, the US, the UK and Canada to help you stay current on recent developments in restructurings in various jurisdictions around the globe. Caution: Be mindful of Hong Kong’s focus on COMI in recognising and assisting foreign liquidators Year in review: Significant US Chapter 15 decisions in 2022 English High Court awards £90M to liquidator in landmark preference claim Australia’s unfair preference laws: What lies ahead for liquidators ..read more

In the second of this two-part post, we continue our overview of claiming in a debtor’s insolvency. In particular we look at contingent debts, interest on debts, and debts in foreign currencies. How are contingent debts valued? For obvious reasons, the element of uncertainty in the value or even the existence of a contingent debt conflicts with the insolvency practitioner’s requirement for certainty in order to make distributions. This conflict is resolved by the insolvency rules placing a duty on the insolvency office-holder to estimate the value of a contingent debt based on a genuine and ..read more

Under English insolvency law, creditors “prove” for their debts against an insolvent debtor’s assets. They do this by submitting a ‘proof of debt’ form. Generally, submitting a proof of debt is necessary to allow the creditor to both receive a distribution from the assets (i.e. to get its money back) and to allow it to participate in creditor decision making procedures. There are limited exceptions to the general rule on proving. Secured creditors need not prove in a liquidation and may simply enforce their security. However, they may choose to prove where there is a shortfall in the value of ..read more

The Rotterdam District Court, the Netherlands, has ruled that an amendment to the ranking of security rights is not possible under the Dutch Scheme procedure (WHOA), without the consent of the relevant secured creditors. While there is still ambiguity about the (im)possibilities of amending creditors’ rights under the WHOA, the ruling is a welcome clarification in the context of distressed finance and debt restructuring in the Netherlands. Background Two debtors were preparing a reorganisation plan under the WHOA, whereby they proposed to demote the security rights of two of their senior lende ..read more

From 1 January 2021, Australia’s insolvency framework for small businesses changed. The purpose of the change was to assist small businesses, with debts under AUD $1 million, to survive – specifically, by providing these businesses with simpler, more flexible restructuring options outside the existing “one size fits all” voluntary administration and scheme of arrangement processes available under the Corporations Act 2001 (Cth). In many cases, those processes are too costly and time-consuming to be a realistic option for financially distressed, but viable, small businesses to pursue, often lea ..read more

The pre-pack was widely used as a restructuring tool in the Netherlands in the aftermath of the global financial crisis. The process was developed by the Dutch restructuring market and facilitated by the majority of Dutch courts. However, as a consequence of the judgment of the European Court of Justice (ECJ) in the Estro-case in 2017, the use of pre-packs had almost disappeared in the Netherlands. In short, the judgment resulted in the Dutch pre-pack no longer being deemed a feasible restructuring tool in restructurings where the workforce needed reshaping, which was typically the case ..read more

When faced with a cross-border or multi-jurisdictional filing, it is important to understand the key attributes of the restructuring legislation in all applicable jurisdictions. Where Canadian assets, creditors and/or operations are involved, the Canadian Companies’ Creditors Arrangement Act (CCAA) provides a restructuring regime that can be beneficial to debtors and creditors. Below are a few factors that are some of the many ‘arrows in the quiver’ to aid in restructuring under Canada’s CCAA. While there are many factors that will be considered when deciding if, when and where restructuring p ..read more

Summary In a highly anticipated decision, the High Court of Australia has unanimously determined in Bryant & Ors v Badenoch Logging Pty Ltd [2023] HCA 2 that the peak indebtedness rule is not part of the unfair preference provisions in the Corporations Act 2001 (Cth) (Act).  The decision means liquidators will no longer be able to select the most optimal time period over which to calculate the net preferential effect of payments made, where a continuing business relationship and a running account is in place between a company and a creditor. This will make it more difficult for a liqu ..read more