Chapter 15 Headlines

A Mumbai court has ordered the liquidation of Nakshatra Brands owned by fugitive diamond trader Mehul Choksi, who is charged with duping banks of thousands of crores of rupees, the Economic Times of India reported. This would be another case where recoveries are likely to be less than 5% of the total exposure, estimated at about Rs 1,500 crore. The Mumbai Bench of National Company Law Tribunal (NCLT) ordered the winding up of the entity, one of the group companies promoted by Choksi.
Boom-era property player Bernard McNamara’s multi-million euro pension pot is protected from his creditors following an EU court ruling, the Irish Times reported. The British high court declared Mr McNamara bankrupt in 2012 on his own application. He was one of many Irish developers who opted to bankrupt themselves in the UK, where the bankruptcy period was one year, rather than in the Republic, where it was 12 years at the time. The Court of Justice of the European Union has ruled that creditors cannot get access to an insurance policy that was part of his Irish-registered pension.
Beleaguered Italian ferry operator Moby SpA dropped its request for an order blocking Morgan Stanley from trading in the company’s debt or interfering in its restructuring, Bloomberg News reported. Moby told a federal court in New York late Sunday that it was withdrawing its application for a temporary restraining order against the bank, which it accused in a Sept. 27 lawsuit of participating in a secret plan to foil its restructuring in Italy and seize control from other creditors.

Not many would have given Luckin Coffee a chance to survive its accounting fraud, yet since falling into provisional liquidation in July 2020, the firm has opened more stores, is getting a capital injection to repay creditors and is looking to exit chapter 15 bankruptcy protection, the South China Morning Post reported. On Tuesday, the Chinese Starbucks wannabe set another milestone by inking restructuring terms that could make bondholders almost whole and settle U.S. class-action lawsuits.

A Cayman Island mutual fund whose manager was charged in a $100 million bait-and-switch scheme filed for chapter 15 bankruptcy protection in the U.S. to protect its assets from lawsuits by disgruntled investors, Bloomberg News reported. Representatives of the so-called Income Collecting 1-3 Months T-Bills Mutual Fund asked a federal bankruptcy judge in New York on Friday to recognize their efforts to liquidate the company, which they said would include an attempt to pay back investors. Recognition of the foreign liquidation would put a hold on any lawsuits against the fund.
The remnants of Greensill Capital, the U.K. financing company that collapsed earlier this year, filed for chapter 15 bankruptcy in the U.S., aiming to halt litigation filed by one of its biggest clients, a coal-mining company owned by the governor of West Virginia, WSJ Pro Bankruptcy reported. Greensill’s U.S. bankruptcy filing on Wednesday seeks to halt a lawsuit brought earlier this year by coal supplier Bluestone Resources Inc. and its owners, West Virginia Gov. Jim Justice and his family, according to court papers filed in the U.S. Bankruptcy Court in New York.

Within the U.S., cannabis is now legal in 16 states including Washington, D.C., with legalization taking effect in two more states, Virginia and New Mexico, later this year, Mondaq reported. This state-level trend toward legalization in the U.S. continues even though cannabis remains illegal at the federal level. However, in Canada, cannabis has been legal at both the federal and provincial levels since 2018. The opening of these markets has generated significant investment on both sides of the U.S./Canadian border.

Brazilian iron ore miner Samarco Mineração SA filed for U.S. bankruptcy protection Monday, after initiating similar proceedings in Brazil earlier this month amid mounting creditor litigation, WSJ Pro Bankruptcy reported. Samarco needed to seek protection under chapter 15 of the U.S. bankruptcy code, as well as Brazilian insolvency laws, after bondholders and bank lenders filed lawsuits in both countries to freeze and start the process of seizing the company’s assets, according to a sworn declaration by Chief Financial Officer Cristina Morgan Cavalcanti.
Malaysia’s high court on Wednesday granted a restraining order for three months on 15 of AirAsia X Bhd.’s creditors over the debt recast talks for the airline, Bloomberg News reported. The order, applied for by AirAsia X to address its obligations in a timely manner, gives the creditors an opportunity for amicable discussions without “extraneous considerations,” according to an exchange filing.
LATAM Airlines Group, the region’s largest airline, on Tuesday reported a loss of $962.5 million in the fourth quarter, hurt by a second wave of the pandemic which has hit Latin America particularly hard, Reuters reported. LATAM filed for bankruptcy protection last May and is still going through a court-supervised reorganization in the United States. Overall in 2020, the airline lost $4.6 billion, compared with a pre-pandemic profit of $196 million in 2019.