In its October 22, 2020, CNH Diversified Opportunities Master Account, L.P. v.

Situation before Brexit

Currently, a UK court’s decision to open insolvency proceedings, and the subsequent proceedings, are automatically recognised under Articles 16 and 17 of the European Insolvency Regulation.

Recognition of insolvency proceedings

After Brexit, it is most likely that the UK will be treated as a non-Member State (unless the UK reaches any special agreement with the EU).

Summary

In April 2017, important changes were effected in connection with German insolvency law and the avoidance of certain antecedent transactions.

Case law had greatly increased the risk of insolvency administrators successfully clawing back assets from creditors of the insolvent entity, which the reforms now address.

Background

For a clawback claim based on intent (Vorsatzanfechtung) to succeed, an insolvency administrator has to prove that:

On January 17, 2017, in a long-awaited decision in Marblegate Asset Management, LLC v. Education Management Finance Corp.,1 the US Court of Appeals for the Second Circuit held that Section 316 of the Trust Indenture Act ("TIA") does not prohibit an out of court restructuring of corporate bonds so long as an indenture's core payment terms are left intact.

German insolvency law contains provisions that allow for the challenge of payments/securitisation of certain shareholder loans in insolvency proceedings. The reason for this is that under German insolvency law, a loan repayment claim of a shareholder against ‘his’ corporation is subordinated by law (sec. 39 para. 1 no. 5 German Insolvency Code).

The US Court of Appeals for the Sixth Circuit has ruled that a lender’s security interest in accounts was not perfected because a reference to “proceeds” in the lender’s UCC financing statement did not expressly refer to “accounts.” The Sixth Circuit surprisingly interpreted the definition of “proceeds”1 in Article 9 of the Uniform Commercial Code to exclude “accounts”2 (despite and without reference to provisions of UCC Article 9 to the contrary).