The long anticipated law of 7 June 2023 implementing the European Directive on restructuring and insolvency brings about a major reform of Belgian insolvency law. Among various other innovations, it introduces a new judicial reorganisation through collective agreement for large enterprises.

The new law will apply to all procedures opened as from 1 September 2023.

In this second of two client alerts, we will examine to which extent creditors can seek to impose a debt-to-equity swap on shareholders within the new judicial reorganisation for large enterprises.

The new Belgian restructuring plan for large enterprises: secured creditors no longer entitled to the reorganisation value.

The long anticipated law of 7 June 2023 implementing the European Directive on restructuring and insolvency brings about a major reform of Belgian insolvency law. Among various other innovations, it introduces a new judicial reorganisation through collective agreement for large enterprises.¹

The new law will apply to all procedures opened as from 1 September 2023.

Since 1993, decisions out of the U.S. Bankruptcy Court for the Southern District of New York consistently adopted the aggregate “rent approach” for calculating lease rejection damages in bankruptcy proceedings. But in Bankruptcy Judge Wiles’ recent decision in In re Cortlandt Liquidating LLC, he departed from the “rent approach” in favor of the “time approach,” which is based on the time remaining under the lease rather than factoring in the total or aggregate rent still owed under the lease.

The COVID-19 pandemic has put the rescue of struggling but viable businesses front of the agenda. The initial response of the Belgian government and legislator was a moratorium on enforcement measures and bankruptcy petitions. Such moratorium can however not be a structural solution in the long term, and expired on 31 January 2021.

In brief

The COVID-19 pandemic has put the rescue of struggling but viable businesses front of the agenda.  The initial response of the Belgian government and legislator was a moratorium on enforcement measures and bankruptcy petitions.  Such moratorium can however not be a structural solution in the long term, and expired on 31 January 2021.

On August 11, 2020, the United States Court of Appeals for the Second Circuit affirmed lower court decisions rejecting Lehman Brothers Special Financing Inc.’s (“LBSF”) attempt to recover nearly $1 billion in payments to noteholders and enforcing certain Priority Provisions (defined below) that subordinated payments otherwise payable to LBSF under related swap transactions.

The High Court of Hong Kong refused to allow a Chapter 11 Trustee to disclose a Decision from Hong Kong winding up proceedings in the US bankruptcy court. The US proceedings were commenced to prevent a creditor from taking action following a breach of undertakings given to the Hong Kong court in circumstances where the company had no jurisdictional connection with the US.

Following our previous article, the Court of Appeal dismissed an appeal following the High Court deciding that a moratorium in relation to restructuring proceedings in Azerbaijan could not be extended in breach of the Gibbs rule, allowing two significant creditors to proceed with their claims in the English Courts.

Despite the debtor's contention that his primary residence was in the United States, the Court held that it had jurisdiction to make a Bankruptcy Order following a petition presented by HMRC.

HMRC presented a bankruptcy petition against Robert Stayton on 30 May 2014 who owed approximately £653,640. The matter came before the court on a number of occasions before the final hearing, with judgment being handed down in November 2018.

A discharged Bankrupt had intentionally misled the Court as to his COMI being in England and Wales in order to obtain a Bankruptcy Order. Four years after the making of the Bankruptcy Order, the Court annulled it on the grounds that the Court did not have jurisdiction to make the Order in the first place.