In a recent decision, the Swiss Federal Supreme Court has clarified equitable subordination risks in connection with shareholder loans. The key takeaways are as follows:

The court-fashioned doctrine of "equitable mootness" has frequently been applied to bar appeals of bankruptcy court orders under circumstances where reversal or modification of an order could jeopardize, for example, the implementation of a negotiated chapter 11 plan or related agreements and upset the expectations of third parties who have relied on the order.

In addition to amendments to the Debt Enforcement and Bankruptcy Act (DEBA) and the Criminal Code (SCC), the Federal Act on Combating Abusive Bankruptcy also brings important changes to the Code of Obligations (CO) and the Commercial Register Ordinance (CRO). The new Act aims at increasing the hurdles for a company to release its debts to the detriment of its creditors. The amendments to the law and ordinances are expected to enter into force in January 2024. 

Background

Das Bundesgesetz über die Bekämpfung des missbräuchlichen Konkurses bringt neben Anpassungen im Schuldbetreibungs- und Konkursgesetz (SchKG) sowie dem Strafgesetzbuch (StGB) auch wichtige Änderungen im Obligationenrecht (OR) und in der Handelsregisterverordnung (HRegV). Dadurch sollen die Hürden für die Befreiung von Schulden zum Nachteil der Gläubiger künftig erhöht werden. Die Gesetzes- und Verordnungsänderungen werden voraussichtlich im Januar 2024 in Kraft treten.

Ausgangslage

À côté des adaptations à la Loi fédérale sur la poursuite pour dettes et faillite (LP) et au Code pénal (CP), la Loi fédérale sur la lutte contre l'usage abusif de la faillite entraîne d'importantes modifications du Code des obligations (CO) et de l'Ordonnance sur le registre du commerce (ORC). Elle vise ainsi à augmenter les obstacles à la libération des dettes au préjudice des créanciers. Les modifications de la loi et des ordonnances devraient entrer en vigueur en janvier 2024.

Situation actuelle

To promote the finality and binding effect of confirmed chapter 11 plans, the Bankruptcy Code categorically prohibits any modification of a confirmed plan after it has been "substantially consummated." Stakeholders, however, sometimes attempt to skirt this prohibition by characterizing proposed changes to a substantially consummated chapter 11 plan as some other form of relief, such as modification of the confirmation order or a plan document, or reconsideration of the allowed amount of a claim. The U.S.

One year ago, we wrote that, unlike in 2019, when the large business bankruptcy landscape was generally shaped by economic, market, and leverage factors, the COVID-19 pandemic dominated the narrative in 2020. The pandemic may not have been responsible for every reversal of corporate fortune in 2020, but it weighed heavily on the scale, particularly for companies in the energy, retail, restaurant, entertainment, health care, travel, and hospitality industries.

In 2019, the U.S. Court of Appeals for the Second Circuit made headlines when it ruled that creditors' state law fraudulent transfer claims arising from the 2007 leveraged buyout ("LBO") of Tribune Co. ("Tribune") were preempted by the safe harbor for certain securities, commodity, or forward contract payments set forth in section 546(e) of the Bankruptcy Code. In that ruling, In re Tribune Co. Fraudulent Conveyance Litig., 946 F.3d 66 (2d Cir. 2019), cert. denied, 209 L. Ed. 2d 568 (U.S. Apr.

Introduction
Business Bankruptcy Filings
Public Company Bankruptcies
Notable Bankruptcy Rulings
Legislative Developments

One year ago, we wrote that the large business bankruptcy landscape in 2019 was generally shaped by economic, market, and leverage factors, with notable exceptions for disastrous wildfires, liabilities arising from the opioid crisis, price-fixing fallout, and corporate restructuring shenanigans.

The year 2020 was a different story altogether. The headline was COVID-19.