Despite the absence of any explicit directive in the Bankruptcy Code, it is well understood that a debtor must file a chapter 11 petition in good faith. The bankruptcy court can dismiss a bad faith filing "for cause," which has commonly been found to exist in cases where the debtor seeks chapter 11 protection as a tactic to gain an advantage in pending litigation. A ruling recently handed down by the U.S.
Chapter 15 petitions seeking recognition in the United States of foreign bankruptcy proceedings have increased significantly during the more than 16 years since chapter 15 was enacted in 2005. Among the relief commonly sought in such cases is discovery concerning the debtor's assets or asset transfers involving U.S.-based entities. A nonprecedential ruling recently handed down by the U.S. Court of Appeals for the Eleventh Circuit has created a circuit split on the issue of whether discovery orders entered by a U.S. bankruptcy court in a chapter 15 case are immediately appealable.
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Jurisdictions across the globe have sought to expand their restructuring toolkits – spurred on by Governments seeking to support business during the pandemic. This has had a significant impact on the options available when restructuring business in Asia Pacific.
U.S. courts have a long-standing tradition of recognizing or enforcing the laws and court rulings of other nations as an exercise of international "comity." It has been generally understood that recognition of a foreign bankruptcy proceeding under chapter 15 is a prerequisite to a U.S. court enforcing, under the doctrine of comity, an order or judgment entered in a foreign bankruptcy proceeding or a provision in foreign bankruptcy law applicable to a debtor in such a proceeding.
In cases under both chapter 15 of the Bankruptcy Code and its repealed predecessor, section 304, U.S. bankruptcy courts have routinely recognized and enforced orders of foreign bankruptcy and insolvency courts as a matter of international comity. However, U.S. bankruptcy courts sometimes disagree over the precise statutory authority for granting such relief, because the provisions of chapter 15 are not particularly clear on this point in all cases.
In what is likely to be the most significant change to the UK restructuring and insolvency market since the Enterprise Act 2002, the Court has yesterday1 paved the way for restructuring plans under Part 26A to the Companies Act 2006 ("RPs") to be used to compromise the rights of landlords, financial creditors and other unsecured creditors provided the company shows that those creditors are "out of the money". There may even be no need to ask those compromised creditors to vote on the RP.
From 31 December 2020, the European Regulation on Insolvency Proceedings (the “EIR”) ceased to apply in the UK. As a result:
At 11pm on 31 December 2020, the UK left the European single market at the end of the transition period agreed as part of the 2019 Withdrawal Agreement. The EU-UK Trade and Cooperation Agreement that was reached on Christmas Eve made no provision for continued recognition of, or co-operation in, insolvency and restructuring proceedings. This briefing considers the implications of this and we examine how:
At 11pm on 31 December 2020, the UK left the European single market at the end of the transition period agreed as part of the 2019 Withdrawal Agreement. The EU-UK Trade and Cooperation Agreement that was reached on Christmas Eve made no provision for continued recognition of, or co-operation in, insolvency and restructuring proceedings. This briefing considers the implications of this and we examine how:
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.