In today's rapidly evolving business landscape, businesses find themselves at the intersection of technological innovation and geopolitical and economic turbulence. Despite the increased reliance on software systems and digital infrastructure, it remains peculiar that in many EU Member States there's still no clear framework for handling software licenses in insolvency.
According to Section 1445 of the Belgian Judicial Code (JC), any creditor can, on the basis of authentic or private documents, levy a (conservatory) garnishment on the sums or goods a third party owes to its debtor. After notification of the garnishment order, the third-party garnishee can no longer hand over these sums and/or goods to the debtor (Section 1451 JC).
Conservatory garnishments are typically used by creditors to put pressure on their debtor (eg notifying a garnishee order to a debtor’s bank, which then freezes the debtor’s accounts).
From 1 September 2023, the restructuring expert will make their first appearance in Belgian restructuring law. This new court-appointed practitioner can be assigned a variety of tasks, ranging from assisting the debtor in negotiations with creditors to supervising the restructuring process and compliance with creditor information obligations.
From 1 September 2023, the Belgian reorganisation procedure by way of a collective plan will be radically changed for large companies. It introduces the obligation to group creditors (and shareholders) into “classes” for the purpose of voting on a restructuring plan.
The Belgian Act of 7 June 2023 transposing EU Restructuring Directive (2019/1023) introduces new rules specifically aimed at large companies filing for a judicial reorganisation through a collective plan (similar to the US Chapter 11 or UK Restructuring Plan procedure).
Introduction
The concept of winding up does not exclusively apply to insolvent companies. Solvent companies can also be wound up, on the initiation of the company’s directors and shareholders (for example, as part of a corporate reconstruction or to close down non-operating or redundant entities).
An overview of the two key procedures to effect the dissolution of a solvent Australian company, being Members’ Voluntary Liquidation and Deregistration, is set out below.
In Shameeka Ien v. TransCare Corp., et al. (In re TransCareCorp.), Case No. 16-10407, Adv. P. No. 16-01033 (Bankr. S.D.N.Y. May 7, 2020) [D.I. 157], the Bankruptcy Court for the Southern District of New York recently refused to dismiss WARN Act claims against Patriarch Partners, LLC, private equity firm (“PE Firm“), and its owner, Lynn Tilton (“PE Owner“), resulting from the staggered chapter 7 bankruptcies of several portfolio companies, TransCare Corporation and its affiliates (collectively, the “Debtors“).
Joining three other bankruptcy courts, Judge Thuma of the District of New Mexico recently held that the rules issued by the Small Business Administration (“SBA“) that restrict bankrupt entities from participating in the Paycheck Protection Program (“PPP“) violated the Coronavirus Aid, Relief, and Economic Security Act, H.R. 748, P.L. 115-136 (the “CARES Act”), as well as section 525(a) of the Bankruptcy Code.
In brief
Even with the fiscal stimulus and other measures taken by the Federal and State governments in Australia, corporate insolvencies are likely to increase in coming months.
Under Australia's insolvency regimes, a distressed company may be subject to voluntary administration, creditor's voluntary winding up or court ordered winding up (collectively, an external administration). Each of these processes raises different issues for the commencement and continuation of court and arbitration proceedings.
The Southern District of New York recently reminded us in In re Firestar Diamond, Inc., et al., Case No. 18-10509 (Bankr. S.D.N.Y. April 22, 2019) (SHL) [Dkt. No. 1482] that equitable principles in bankruptcy often do not match those outside of bankruptcy. Indeed, bankruptcy decisions often place emphasis on equality of treatment amongst all creditors and are less concerned with inequities to individual creditors.