As discussed in previous installments of this White Paper series, the Lummis-Gillibrand Responsible Financial Innovation Act (the “Bill”)¹ proposes a comprehensive statutory and regulatory framework in an effort to bring stability to the digital asset market. One area of proposed change relates to how digital assets and digital asset exchanges would be treated in bankruptcy. If enacted, the Bill would significantly alter the status quo from a bankruptcy perspective

OVERVIEW OF DIGITAL ASSETS IN BANKRUPTCY

Oceanfill Ltd v Nuffield Health Wellbeing Ltd and Cannons Group Ltd. [2022] EWHC 2178 (Ch)

A recent decision of the High Court has given helpful clarity on the effects of the UK's restructuring plan procedure on lease agreements and the implications for lease guarantors.

The Virgin Active plan

Summary

Almost a year to the day since the High Court rejected the Amigo loans group's previous proposal for a scheme of arrangement, on 23 May 2022, Mr Justice Trower sanctioned the group's latest scheme proposal which would create the conditions for the group to resume lending and resolve the claims of thousands of the group's customers arising from its lending practices.

German gaming group Löwen Play obtained sanction for a scheme of arrangement following a hearing in the High Court on 5 May 2022. Mr Justice Johnson granted an order sanctioning the scheme following its approval by a significant majority of creditors at the single scheme meeting. The group operates a gaming arcade business in Germany and the Netherlands, and the relevant scheme company was incorporated in Germany.

In December 2021 the Insolvency Service launched a Consultation on the future of insolvency regulation. The Consultation proposes a number of changes that will have a significant impact on the insolvency profession, including the creation of a single regulator for insolvency professionals and bringing firms providing insolvency services within the scope of insolvency regulation for the first time. The deadline for responses is 25 March 2022, although there is no specified timeline for the implementation of any reforms.

Courts disagree over whether a foreign bankruptcy case can be recognized under chapter 15 of the Bankruptcy Code if the foreign debtor does not reside or have assets or a place of business in the United States. In 2013, the U.S. Court of Appeals for the Second Circuit staked out its position on this issue in Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), 737 F.3d 238 (2d Cir. 2013), ruling that the provision of the Bankruptcy Code requiring U.S. residency, assets, or a place of business applies in chapter 15 cases as well as cases filed under other chapters.

The foundation of chapter 15 of the Bankruptcy Code and similar legislation enacted by other countries to govern cross-border bankruptcy cases is "comity" and cooperation among U.S. and foreign courts. The importance of these concepts was recently illustrated by a ruling handed down by the U.S. Bankruptcy Court for the Southern District of Florida. In In re Varig Logistica S.A., 2021 WL 5045684 (Bankr. S.D. Fla. Oct.

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.

The English High Court has rejected a challenge to the CVA proposed by Caffè Nero in a decision that provides guidance on the use of the electronic voting procedure for votes on CVAs, the effectiveness of modifications made to a CVA during the process and the duties of the directors and nominees when considering last minute offers for a business in a restructuring scenario. Mr Justice Green rejected all grounds of challenge brought by Mr Ronald Young, a landlord to Nero Holdings Limited ("NHL").