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.

In late August 2022, the Spanish Parliament passed the transposition into Spanish law of the Directive (EU) 2019/1023 of the European Parliament and of the Council, of June 20th 2019, on Preventive Restructuring Frameworks. The draft of this new Act was subject to multiple amendments and created great local expectations (also considerable controversy). The text finally enacted in Law 16/2022 introduces major reforms in the insolvency field which we hereby depict.

Introduction of the so-called “Restructuring Plans”

The Spanish Parliament's extraordinary plenary session of August 25, 2022, has passed a law amending the recast Insolvency Act, which amendment will enter into force 20 days after it is published in Spain's Official State Gazette, the "BOE".

This new law, after suffering numerous amendments as a bill, establishes major changes in the area of insolvency, and it incorporates into the Spanish legal system the guidelines established by Directive (EU) 2019/1023 of the European Parliament and of the Council, dated June 20, 2019, on preventive restructuring frameworks.

The active trading of loans made to a borrower that has become unable to repay in full (known as non-performing loans or distressed debt) has been a feature of the North American and European loan markets for a number of years.

On 4 November 2021, the High Court of Australia heard the arguments put forward by Wells Fargo Trust Company, National Association and Willis Lease Finance Corporation, together Wells Fargo, and the administrators (the Administrators) of the Virgin Australia Airlines group, which entered into administration on 20 April 2020. The dispute primarily concerned who should pay for the redelivery of four aircraft engines capable of being used on B737s (the Engines) to the lease redelivery location in Florida.

In what could prove to be a landmark judgment, a Dubai court ruled earlier this month that the directors of a company in bankruptcy should be personally liable for the company’s debts, to the sum of almost AED 450,000,000 (around US$ 122,000,000).

Article 144 of Federal Law No.9 of 2016 (the “Bankruptcy Law”) allows a court to order directors to pay a bankrupt company’s debts where: