The Court of First Instance has recently helpfully summarised the legal position on schemes of arrangement under both Hong Kong law and English law. Notably, it has called for further development in cross-border coordination in order to avoid the trouble of parallel insolvency proceedings and it has raised a red flag in relation to detailed disclosure of restructuring costs: Da Yu Financial Holdings Limited [2019] HKCFI 2531.
In Swiss Cosmeceutics (Asia) Ltd [2019] HKCFI 336, Mr Justice Harris of the Hong Kong Court of First Instance declined to wind up a company despite it failing to establish a bona fide defence on substantial grounds. Mr Justice Harris commented on the difficulties presented by sporadic record keeping, and reiterated the principle that the burden of proof lies with the company to demonstrate a bona fide defence on substantial grounds, despite the existence of anomalies in the petitioner’s claim.
Facts
In a highly international cross-border restructuring, the High Court of Hong Kong has refused to assist the New York-based Chapter 11 trustee of a Singaporean subsidiary of the Cayman-incorporated Peruvian business China Fishery Group (“CFG”).
On 20 June 2018, the Indian Government released a suggested draft chapter on cross-border insolvency to be included into the Insolvency & Bankruptcy Code, 2016 (Code). This addresses a missing link in the ambitious reforms of the Indian insolvency framework and is to be welcomed.
It is timely, with further reform of the new Indian Bankruptcy Code (IBC) in prospect, to outline our thoughts on some of the current issues on which various market participants have requested an understanding of the approach and learnings of overseas practitioners.
Introduction
The Insolvency and Bankruptcy Code, 2016 (Code) has just been passed by both Houses of the Indian Parliament. The key objectives of the Indian government in driving this legislation forward were to improve India‘s poor ranking on the ease of doing business index created by the World Bank Group and to stimulate the growth of the Indian capital markets, and the stated intention of the Code is to replace the relevant insolvency, restructuring and winding up provisions which are spread over a number of Indian statutes.
Our role
Pension Protection Fund: valuation assumptions
The PPF has consulted on changing the assumptions used for section 143 valuations (used for schemes in assessment periods) and section 179 valuations (used when setting a scheme's risk-based levy). The PPF expects that the proposed changes would increase section 143 and section 179 liabilities by just under 4% and would potentially lead to a small increase in the number of schemes transferring to the PPF.
Pension Protection Fund: insolvency risk provider
HIGHLIGHTS
The credit crunch caused problems for businesses at the same time as the value of pension scheme assets plunged, adding ballooning defined benefit pension deficits to the woes of struggling companies.
Company insolvencies, and attempts at restructuring to avoid insolvencies, can have a significant impact on the pension schemes sponsored by those companies. The pensions issues can also act as a significant obstacle to restructuring.
Proposals issued October 2010
Confirmation given 31 January 2011
Policy statement issued May 2011
Draft guidance on the bespoke measurement of investment risk issued May 2011. Consultation ends on 24 June 2011
Consultation on the 2012/13 levy determination expected in autumn 2011
The PPF has confirmed its intention to implement a new levy framework from 2012/13. Key features of the framework confirmed in the policy statement include: