The Sino-Ocean restructuring plan is the first to be sanctioned in 2025 – but it starts the year off with a very interesting bang. In a relatively short (and commendably clear) judgment, the Court addresses head on:
As the nights draw in and the new year approaches, we take stock of the state of play for European restructuring and look ahead at potential trends for 2024.
Completion of legal reforms
On 22 July 2022 and after the judge ordered a delay for more evidence, the English court sanctioned the restructuring plan proposed by Houst Limited (Houst). Houst is an SME that is concerned with the provision of property management services for short-term/holiday lets. Its business was badly affected by the Covid-19 pandemic, meaning it was both cash flow and balance sheet insolvent when proposing the plan.
On 18 March 2021, the UK Government published its white paper on restoring trust in audit and corporate governance. On 31 May 2022, the Government published its response to the consultation.
The U.S. Court of Appeals for the Sixth Circuit recently ruled in a case involving a Chapter 13 debtors’ attempt to shield contributions to a 401(k) retirement account from “projected disposable income,” therefore making such amounts inaccessible to the debtors’ creditors.[1] For the reasons explained below, the Sixth Circuit rejected the debtors’ arguments.
Case Background
The UK's latest quarterly company insolvency statistics, published on 29 October, suggest that the unexpectedly calm seas seen over the last 18 months (and maintained by unprecedented government economic support) may be starting to give way to stormier waters as corporate insolvencies begin to return to pre-pandemic levels.
A statute must be interpreted and enforced as written, regardless, according to the U.S. Court of Appeals for the Sixth Circuit, “of whether a court likes the results of that application in a particular case.” That legal maxim guided the Sixth Circuit’s reasoning in a recent decision[1] in a case involving a Chapter 13 debtor’s repeated filings and requests for dismissal of his bankruptcy cases in order to avoid foreclosure of his home.
On 30 April 2021, reforms to the UK’s regime governing sales in administration by way of a ‘pre-pack’ to a connected party purchaser came into force.
The centrepiece of the reforms is a new requirement for a connected party purchaser to obtain an opinion from an independent ‘evaluator’ on whether the terms of the sale are reasonable.
While the reforms add additional process points that must be navigated in relevant cases, they will bring improved transparency to an important rescue tool which has, at times, attracted warranted criticism.