In this week’s TGIF, we consider the recent case of Vita Group Ltd, in the matter of Vita Group Ltd [2023] FCA 400, in which his Honour Justice Jackman outlined practical changes to the way schemes of arrangement should be implemented through the Federal Court to make them simpler, faster and more cost efficient.

Key takeaways

As the economy continues to face challenges and the threat of bankruptcy becomes more prevalent among businesses, landlords must be more vigilant in protecting their interests in commercial leases. One area of particular concern is leases that fall under Section 467 of the Internal Revenue Code (“Section 467 Leases”).

In this week’s TGIF, we consider the Federal Court’s recent decision inFotios (Bankrupt) v Helios Corporation Pty Ltd (No 3) [2023] FCA 251, and earlier decisions in the same proceedings, clarifying the current Australian position as to priorities between creditors of successive trustees.

Key takeaways

Last month, Judge Caproni of the Southern District of New York issued a ruling stating that if a commercial lease does not require a landlord to hold a security deposit in trust and if there is no state statute generally requiring landlords to do so, the security deposit may not be recoverable by the tenant when the landlord files for bankruptcy. See 10FN Inc. v. Cerberus Business Finance LLC, 21-5996 (S.D.N.Y. Oct. 18, 2022).

This week’s TGIF considers a recent decision in Re HRL Limited (in liq) & Anor [2022] VSC 693, in which the Court approved a success fee in addition to the liquidators’ remuneration calculated by the application of a time-based costing method.

Key takeaways

BTI 2014 LLC (Appellant) v Sequana SA and Others (Respondents)

Summary

The UK Supreme Court has, for the first time, considered the existence, content and engagement of an obligation on directors to take into account the interests of creditors when a company becomes, or is on the cusp of becoming, insolvent (otherwise known as the “creditor duty”).

Two years on: review of CIGA permanent measures

Since our last blog on this topic, the English court has provided further guidance on certain key issues and novel features relevant to restructuring plans and schemes of arrangement in its recent judgments on Amigo Loans, Smile Telecoms, EDF & Man, Re Safari Holdings (Löwen Play) and Haya. This piece provides an overview of key points from these cases.

Government support during the pandemic and extremely strong credit markets saw exceptional fund raising levels in 2021, in spite of a slower Q4. Borrowers secured increasingly favourable terms from their lenders, with only a little pushback as the year progressed. Private credit continued to compete for greater market share and found interesting opportunities in smaller and more complex names. 2021 has proved to be a record year for financings and the continued availability of cheap capital, with reasonable stability and outperformance from riskier credits.

The restructuring plan has so far proven to be a powerful tool to facilitate restructurings of complex capital structures. Two recent cases provide further helpful guidance for advisers when formulating a restructuring plan and for investors who may be affected by its terms.

Amicus Finance plc (in administration) ("Amicus")