Tradition Financial Services Ltd v Bilta (UK) Ltd and others [2023] EWCA Civ 112

Key Takeaways:

The most innovative features of the new Insolvency Code include, among others: (i) the introduction of safeguard obligations aimed at detecting corporate distress and promoting the adoption of restructuring tools at an early stage; (ii) a more favourable approach to procedures allowing for business continuation on a going concern basis, as opposed to those leading to liquidation of the company; and (iii) specific provisions concerning the insolvency / restructuring of company groups.

Introduction

The conversion into statute on 23 October 2021 of the so-called Business Distress Bill adds new provisions to those recently adopted by the Italian government to address corporate distress following the COVID-19 pandemic, to provide companies with new legal tools to prevent the onset of economic distress or overcome reversible financial instability.

In a decision widely anticipated by investors in emerging market and distressed debt, the Court of Appeal has upheld the decision of the High Court to refuse to grant an indefinite moratorium on claims under certain English law debts under the Cross Border Insolvency Rules (“CBIR”). In doing so, the Court of Appeal has reaffirmed a long-standing principle of English common law that provides important protection to creditors; known as the Rule in Gibbs, the rule provides that a debt may only be discharged according to its own governing law.

In a 2-1 opinion, the Second Circuit overruled the district court in Marblegate Asset Management LLC v. Education Management Corp., finding no violation of the Trust Indenture Act (“TIA”) in connection with an out-of-court debt restructuring.

Background