It is not uncommon for contractors, in several industry sectors, to contract with a special purpose vehicle (SPV), whose day-to-day management is effectively controlled by a parent company, and the SPV has with little to no assets beyond cash flow provided by its parent. In this article we look at what a claimant could do outside of the traditional insolvency process in circumstances where the SPV goes into a form of external administration such as administration or liquidation and there are no assets available to the external administrators.
In the recent decision of Re PBS Building (Qld) Pty Ltd [2024] QSC 108, the Supreme Court of Queensland considered for the first time the operation of the State’s new project and retention trust account regime in the context of an insolvency. The decision provides useful guidance to insolvency practitioners and subcontractors as to their rights in relation to trust accounts established by an insolvent head contractor.
The High Court of Australia’s decision in Wells Fargo Trust Company, National Association (as Owner Trustee) & Anor v VB Leaseco Pty Ltd (Administrators Appointed) & Ors (the “Willis” case).
On Wednesday, 16 March 2022, the High Court of Australia handed down its decision in the Willis case.
Background
Following our previous alert here on Justice Middleton’s decision in Wells Fargo Trust Company, National Association (trustee) v VB Leaseco Pty Ltd (Administrators Appointed),[1] the administra
On 14 May 2015, Australia acceded to the Convention on International Interests in Mobile Equipment (“Cape Town Convention”) and the Protocol to the Cape Town Convention (“Cape Town Protocol”). In particular, for insolvency related proceedings, Australia adopted what is known as “Alternative A” in aviation industry speak. The Cape Town Convention became effective as Australian law on 1 September 2015 and applies to the relevant aviation leasing and financing transitions entered into after that date.
With a recent draft act to amend the German Insolvency Code (Insolvenzordnung – InsO), the German Federal Ministry of Justice and Consumer Protection intends to reduce uncertainty regarding insolvency claw-back, in particular regarding Sec. 133 InsO. The result may be that restructuring opinions that are now market standard when (re)financing financially troubled companies in Germany become redundant.
Current legal status
In a situation where the survival of a German company depends on restructuring measures by third parties (mainly lenders) who fear that the shareholders may use their hold-out position in a potential subsequent exit by sale of the shares, it is an option for the lenders to demand from the shareholders that the shares are transferred to a trustee to be held in a “double-sided trust” (doppelnützige Treuhand).
Key point
In a financial restructuring, creditors have to pay attention that the restructuring undertakings of the insolvent company are likely to be achieved.
Background
Under German insolvency law, the insolvency administrator may challenge a transaction if an insolvent company intended to disadvantage its creditors (and the other party knew that intention). The German Supreme Court presumes such intention if a company knew about its impending illiquidity.
Facts
This article looks at ways to restructure debt taken up by a German company. First it discusses financings governed by English law and then moves on to look at options where German law-governs the debt.
Financings governed by English law (restructuring through schemes of arrangement)
In recent years a number of German companies such as Tele Columbus, Rodenstock and Primacom have used English law scheme of arrangements to restructure their debt.
An element of the restructuring toolbox