The EMEA Determinations Committee's recent bankruptcy determination involving Selecta CDS provides additional insight on the types of chapter 15 filings that are likely to trigger Credit Events.
Rumours that a company is in the zone of insolvency may create a race to the assets, with potential creditors or interested parties commencing proceedings in an attempt to secure payment from the company before its assets are fully dissipated or tied up in the insolvency process. This can destroy the collective value in the enterprise or scupper a restructuring and result in significant duplicative costs.
In Short
The Situation: On August 11, 2020, a Credit Derivatives Determinations Committee for EMEA ("DC") unanimously determined that the Chapter 15 filing by British retailer Matalan triggered a Bankruptcy Credit Event under standard credit default swaps ("CDS").
The Result: The DC's decision diverged from its only prior decision (involving Thomas Cook) on whether a Chapter 15 petition constituted a Bankruptcy Credit Event.
What is an SPC?
Treatment in insolvency situations
ABC Company (SPC) v J & Co Ltd
Axiom
Additional case law
SPCs and litigation funding
Test for insolvency
Adopting the analysis of the United Kingdom Jurisdictional Task Force ('UKJT") on the proprietary status of crypto currencies, a recent decision of the English High Court, AA v Persons Unknown,[1] has found that crypto assets such as Bitcoin are "property" and therefore capable of being the subject of a proprietary injunction or freezing order.
You can read the infographic version of our guide here.
Scheme of Arrangement (Section 86)
A Court approved compromise entered into between a company and its creditors or members or any classes of them. "Arrangement" is construed extremely broadly making a scheme a very flexible restructuring tool.
For the benefit of our clients and friends investing in European distressed opportunities, our European Network is sharing some current developments.
Recent Developments