The Czech Supreme Court recently issued two decisions having significant impact on the position of secured creditors (i.e. generally financial institutions) within insolvency proceedings. Both decisions stem from one of the first major insolvencies conducted under the (then new) Czech Insolvency Act effective from 2008 in respect of the group of companies in a glass-making business. This article briefly reviews those decisions and points out their practical effects on the rights of secured creditors.

Security interest in rental income

KEY POINTS

Lending to a foreign company? If you choose English law to govern your facility documents and provide for the English court to have exclusive jurisdiction, an English scheme may be a viable means of restructuring the debt later, if the need arises.

Lending to a foreign company? If you choose English law to govern your facility documents and provide for the English court to have exclusive jurisdiction, an English scheme may be a viable means of restructuring the debt later, if the need arises.

Where lenders are lending to and taking security from companies that may become subject to special administration regimes, the value of the security may be affected and enforcement options restricted. More companies are subject to these procedures than you might think. So, how do you identify whether your borrower is subject to one of these regimes? Should you place a lower value on your security? What are your enforcement rights? Might your borrower become affected after grant of the security?

Special administration regimes

There has been an upturn in the frequency of trade finance workouts, restructurings and formal insolvencies. Susan Moore and Luci Mitchell-Fry look at some key issues that banks face when trade finance lending passes to "bad bank".

The bank's decisions at every stage of a trade finance transaction are critical: at origination; when following a workout/restructuring; and once a formal insolvency process becomes a reality.

Origination