This article first appeared in Accountancy Daily on 20 January 2023.
With supply chain problems, war in Europe and other issues leading to higher inflation and an increasingly uncertain economic outlook, this article explores the options available to companies experiencing financial distress.
On December 5, 2022, in In re Global Cord Blood Corp., 2022 WL 17478530 (Bankr. S.D.N.Y. Dec. 5, 2022) (“Global Cord”), the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) denied recognition of a proceeding pending in the Grand Court of the Cayman Islands (the “Cayman Proceeding” and the court, the “Cayman Court”) because it was more like a corporate governance and fraud remediation effort than a collective proceeding for the purpose of dealing with reorganization or liquidation, as Chapter 15 of the Bankruptcy Code requires.
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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.
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Paul, Weiss Helps NYC Taxi Drivers Restructure Debt to Keep Their Medallion
Background
Houst Ltd (“the Company”) is a property management company which specialises in short-term holiday rentals through an online platform. It is an SME (small or medium-sized enterprise) with total liabilities of approximately £10 million at stake. The Company became both cashflow and balance sheet insolvent having experienced financial difficulty during the Covid pandemic and this resulted in creditors having threatened winding-up petitions.
Summary
The Hong Kong Court and the US Bankruptcy Court have made conflicting comments regarding the discharge of New York law-governed debt by a foreign scheme of arrangement, where that scheme is the subject of recognition under Chapter 15 of the US Bankruptcy Code.
The Ninth Circuit Court of Appeals held that in a solvent debtor case, unsecured creditors have an equitable right to postpetition interest at the applicable contractual or state law rate in order to be deemed unimpaired.
The Insolvency Service has published a report on the research commissioned by it on the use of Company Voluntary Arrangements ("CVAs") by large companies in the retail trade, accommodation and food and beverage sectors.
In May 2021, the UK Government published a Consultation which set out its proposals for targeted (but significant) amendments to certain aspects of the existing UK insolvency arrangements for insurers.