(Promontoria (Oak) Ltd v Emanuel; Emanuel v Promontoria (Oak) Ltd; Promontoria (Henrico) Ltd v Samra; Promontoria (Chestnut) Ltd v Simpson & Anor; Bibby Invoice Discounting Ltd v Thompson Facilities and Project Management Services Ltd & Anor)

Introduction

This morning, the Court of Appeal has handed down landmark guidance on how far a defendant in litigation can look under the bonnet of their pursuer's commercial transactional documents and check out the mechanical parts of a deal to which the defendant is not party.

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 A nonprecedential ruling recently handed down by the U.S. Court of Appeals for the Eleventh Circuit has created a circuit split on the issue of whether discovery orders entered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.

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In cases under both chapter 15 of the Bankruptcy Code and its repealed predecessor, section 304, U.S. bankruptcy courts have routinely recognized and enforced orders of foreign bankruptcy and insolvency courts as a matter of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 keeping with the general theme of this 'new year', the insolvency division of the English High Court started 2021 in much the same way as it finished off 2020.

It followed up its landmark judgment in Re Tokenhouse VB Limited [2020] EWHC 3171 (Ch) (Tokenhouse) with a decision in the case of Re NMUL Realisations Limited [2021] EWHC 94 (Ch) (NMUL), in ruling that failure to comply with procedural notice provisions did not invalidate the appointment of the administrators.

Avoiding a Cliff-edge of Insolvencies? Observations ferom the recent House Of Lords debate on extension of creditior restrictions

COVID PROTECTIONS EXTENDED TO GIVE BUSINESSES A LAST CHANCE TO PLAN RECOVERY. TIME TO CONSIDER A COVID-19 CVA?

If the announcements last week on the lack of downward tier revisions for many areas is the bad news, the silver lining for the struggling and affected businesses came in the reinstatement of the temporary suspension on the use of statutory demands and winding up petitions until 31 March 2021.

Company Voluntary Arrangements (CVAs) are an insolvency procedure established under the Insolvency Act 1986 which allow a struggling company to reach a compromise on debts due with a sufficient majority of creditors, thereby avoiding a formal insolvency. They have primarily been used only by large high street retailers and are not often considered, particularly in Scotland, a realistic option for small and medium companies (SMEs).

In the face of the COVID-19 pandemic and with a new model available, we believe it is time for a rethink.

This case is within the Chestnut Portfolio acquired by the Cerberus global private investment group and has been one of its most hard fought cases, involving personal debts and security of over £12m and litigation spanning back to 2016.

Summary