In yet another example of the Dubai International Financial Centre (DIFC) making its company and insolvency law even more versatile, the DIFC has introduced a mechanism which will operate in a similar manner to a scheme of arrangement under English law. The law came into effect on 12 November 2018.

Key terms

In September 2018 the Dubai International Financial Centre Authority (“DIFCA”) announced that it proposes to replace its current insolvency law with a new law to update the insolvency regime in the Dubai International Financial Centre (“DIFC”) and that it has launched a consultation in relation to the same.

Why are changes proposed?

Over the Bank holiday weekend, the UK government announced that it intends to introduce new legislation to implement certain measures (detailed below) as soon as parliamentary time permits.

The High Court yesterday held that a Chairperson of a shareholder scheme meeting may reject votes cast against a scheme of arrangement in circumstances where the shares were acquired through an artificial share-splitting exercise designed to frustrate the scheme. It is the first English case to consider this issue and while it arose in the context of a shareholder scheme, the impact is also significant for debt restructurings implemented by way of a creditor scheme of arrangement.

Background

On 22 November 2016, the European Commission published a draft directive on insolvency, restructuring and second chance. In this briefing we consider the proposals and what it means for European insolvency and for the UK.

On 22 November 2016, the European Commission published a draft directive on insolvency, restructuring and second chance (the Proposals).

What are the Proposals? The Proposals have three main parts:

Reversing the lower courts, the Third Circuit Court of Appeals has today held that, under New York law (which governs 95% of all indentures), the early repayment of indenture notes in Chapter 11 is an optional redemption requiring the payment of make-whole notwithstanding the automatic acceleration of the notes due to the Chapter 11 filing. Delaware Trust Co. v. Energy Future Intermediate Holding Company LLC (In re Energy Future Holdings Corp.), Case No. 16-1251 (5th Cir. Nov. 17, 2016).

Summary

Third parties associated with an employer may find themselves liable to contribute to the employer's occupational pension scheme. Where a pension scheme is in deficit, the Pensions Regulator has powers - so-called 'moral hazard' powers - that can require a third party to give financial support or a specific payment to the pension scheme.

Summary

We reported in December 2014 that the amendments to the EC Regulation on Insolvency Proceeding (the Recast Regulation) were virtually finalised and agreed between the various legislative organs of the European Union.

Finally after several years, the debate is now over and the European Parliament has now approved the final text – broadly as it was in December 2014. The outcome is good news for cross border corporate restructurings and insolvencies around Europe, but it will not come into force for over two years.

Next steps

Extra Extra Read All About It. It was a cataclysmic weekend in college football for the Big 12 conference. The college football playoff committee elevated the one-loss Ohio State Buckeyes (Big 10) into the fourth and final slot in the inaugural College Football Playoff, taming a one-loss Baylor Bears (Big 12) sloth and a one-loss TCU Horned Frogs (Big 12) colony in the process. Some naysayers may look to the Big 12′s soft schedules and the absence of a league tiebreaker game as drivers of the committee’s decision.

If you’re a secured lender, news of a Chapter 11 filing by your borrower can be unsettling. The commencement of a Chapter 11 case triggers an “automatic stay” which, with certain exceptions, operates as an injunction against all actions affecting the debtor or its property.3 Under the automatic stay, a secured lender holding a security interest in the debtor’s property may not repossess or foreclose on that property without the permission of the bankruptcy court.