Crypto firm bankruptcies and resulting disruption in the crypto ecosystem will continue to exacerbate liquidity and regulatory concerns in this space. Signs of contagion are evident as prices of almost every cryptocurrency type have halved in recent months. Since all participants supporting the crypto ecosystem are at risk, managing that risk is critical.

Fund managers should be prepared on multiple fronts, as the following examples illustrate:

Everything, everywhere, all at once is our risk thesis for 2023, but one must not forget about concentration risk. This issue has rocketed up diligence agendas for LPs and GPs alike as the collapse of Silicon Valley Bank proved it really was the bank for venture capital.The entry of SVB into receivership on March 10, 2023 highlighted just how central it had become to U.S.

An extension to the Debt Warehousing Scheme has been announced by the Revenue Commissioners.

The Debt Warehousing Scheme (DWS) was introduced during the COVID-19 pandemic to provide support to businesses that were experiencing liquidity and trading difficulties. It has permitted businesses to “warehouse” or defer payment of their tax debts for a specified period.

The corporate insolvency aspects of Directive (EU) 2019/1023 on preventive restructuring were recently implemented in Ireland through the European Union (Preventive Restructuring) Regulations 2022.

What is the so-called "creditor duty"?

This is the duty, introduced into English common law by the leading case of West Mercia Safetywear v Dodd1 in 1988, of company directors to consider, or act in accordance with, the interests of the company's creditors when the company becomes insolvent, or when it approaches, or is at real risk of insolvency.

Background

On 22 July 2022, the English High Court sanctioned Houst Limited’s (“Houst” or the “Company”) restructuring plan (the “Restructuring Plan”), which significantly, is the first time a Restructuring Plan has been used to cram down HM Revenue & Customs (“HMRC”) as preferential creditor.¹

Background

Ordinarily, in civil proceedings a successful party in litigation will be awarded their costs.

This is known as the legal rule or principle that costs follow the event. But a decision of the Court of Appeal in 2021 suggests that this rule may not necessarily apply in examinership proceedings.

Since the Veolia case in the mid 2000s the Irish courts have taken the view that the costs follow the event rule need not necessarily be followed in every instance and that they have a certain discretion to depart from this default rule.

On 12 January 2022, the English High Court granted Smile Telecoms Holdings Limited’s (“Smile” or the “Company”) application to convene a single meeting of plan creditors (the super senior creditors) to vote on the Company’s proposed restructuring plan (the “Restructuring Plan”). It is the first plan to use section 901C(4) of the Companies Act 2006 (“CA 2006”) to exclude other classes of creditors and shareholders from voting on the Restructuring Plan on the basis that they have no genuine economic interest in the Company. 

Background 

On the 19th of August 2021, the English High Court sanctioned a Part 26A restructuring plan proposed by the administrators of Amicus Finance plc (in administration) (“Amicus”) for the company’s solvent exit from administration, enabling the company to be rescued as a going concern (the “Restructuring Plan”).

The existence of a personal guarantee over a debt may affect the enforceability of that debt after a company has gone through an examinership process.

A creditor’s ability to enforce a debt subject to a guarantee after a period of examinership is dependent upon that guarantor having been granted a right to vote at the creditors’ meeting approving the scheme of arrangement.