Once perceived as a relatively moribund restructuring market, where stressed and distressed borrowers and lenders ended up stuck in interminable refinancing cycles faced with court proceedings that, at least in perception, prioritized local creditor interests, today’s landscape could not be more different.

On 1 November 2021, the Federal Decree Law No. 35 of 2021 (the "Decree") (amending certain provisions of the Federal Decree Law No.9 of 2016 concerning Bankruptcy (the "UAE Bankruptcy Law")) came into force. The publication of the Decree follows a significant decision relating to directors' duties by the Dubai Court of First Instance in the matter involving the bankruptcy of Marka Holdings PJSC ("Marka") (the "Marka Case").

Overview

The Kingdom of Saudi Arabia overhauled its corporate insolvency framework in 2018 with the introduction of a new bankruptcy law. In this client alert we examine the new Bankruptcy law in detail.

Executive Summary

The economic fallout from the COVID-19 pandemic will leave in its wake a significant increase in commercial chapter 11 filings. Many of these cases will feature extensive litigation involving breach of contract claims, business interruption insurance disputes, and common law causes of action based on novel interpretations of long-standing legal doctrines such as force majeure.

U.S. Bankruptcy Judge Dennis Montali recently ruled in the Chapter 11 case of Pacific Gas & Electric (“PG&E”) that the Federal Energy Regulatory Commission (“FERC”) has no jurisdiction to interfere with the ability of a bankrupt power utility company to reject power purchase agreements (“PPAs”).

The Supreme Court this week resolved a long-standing open issue regarding the treatment of trademark license rights in bankruptcy proceedings. The Court ruled in favor of Mission Products, a licensee under a trademark license agreement that had been rejected in the chapter 11 case of Tempnology, the debtor-licensor, determining that the rejection constituted a breach of the agreement but did not rescind it.

Few issues in bankruptcy create as much contention as disputes regarding the right of setoff. This was recently highlighted by a decision in the chapter 11 case of Orexigen Therapeutics in the District of Delaware.

The judicial power of the United States is vested in courts created under Article III of the Constitution. However, Congress created the current bankruptcy court system over 40 years ago pursuant to Article I of the Constitution rather than under Article III.

Southeastern Grocers (operator of the Winn-Dixie, Bi Lo and Harvey’s supermarket chains) recently completed a successful restructuring of its balance sheet through a “prepackaged” chapter 11 case in the District of Delaware. As part of the deal with the holders of its unsecured bonds, the company agreed that under the plan of reorganization it would pay in cash the fees and expenses of the trustee for the indenture under which the unsecured bonds were issued.

The Supreme Court’s recent decision in Merit Management Group, LP v. FTI Consulting, Inc. has appropriately drawn significant attention.