Overall 2018 has produced a number of positive judgments from the perspective of lenders and insolvency practitioners.

In particular, the courts delivered many useful judgments disposing of numerous challenges to the enforceability of loans and security and, also, restricting abuse of the courts’ processes.

Contemptuous McKenzie Friends

近年来，我国宏观经济增长放缓，国家调整产业和信贷政策，并逐渐加强金融监管，商业银行的资产质量压力有所增加，十亿甚至百亿级别的债务逾期或潜在违约浮出水面。这些巨无霸级别的潜在不良贷款风险，迫切要求商业银行审查并改善贷前贷后管理中的遗漏和问题，也对商业银行的危机处理能力提出了更高的挑战。

大敌当前，痛定思痛，当危机来临时，商业银行的管理层和执行层需要的是冷静的思考、周密的策划，以及必要时刻壮士断腕的决策力。从本团队近期参与处理的几项复杂的债务逾期及潜在违约案例来看，危机的表象多种多样，除了资金周转困难带来直接的偿付危机；有的则是债务人控制人挪用公司资金投入股市炒股，有的是公司实际控制人陷入刑事调查和指控，也有的则更为隐蔽，债务人关联主体在境外受到他国政府的调查等等。这些危机虽然不一定直接表现为到期不付，但可能已经导致债务人违反融资文件的陈述、承诺条款，甚至通过交叉违约触发了违约事件或潜在违约事件。

本文旨在梳理危机处理的思路，通盘策划全面追索资产的策略，为贷款管理工作层面制定一份简介易行的“工作方案”，以便为后续的债务重组和清偿争取宝贵的时间，避免弯路：

一、梳理融资文件

As the Chinese economy enters the “new normal”, the Chinese government has been adjusting its industrial and credit-related policies and strengthening regulation of Chinese financial institutions. A large number of non-performing loans (NPLs) as well as actual loan defaults have started to surface. The risks associated with rising levels of NPLs require Chinese banks to enhance their ex ante and ex post credit risk management practices.

The Court of Appeal has helpfully confirmed that a judgment creditor can seek an order appointing a receiver by way of equitable execution where:

• the debtor holds a legal or equitable interest in property; and
• execution against the property is not available at law by one of the usual methods, for instance via the sheriff or by a garnishee order.

There was previously doubt as to whether such a receiver could be appointed where the debtor held a legal, as opposed to an equitable interest, in property.

The High Court has recently expressed concern that distressed borrowers are being duped into paying money to the anonymous promoters of schemes, which purport to protect them from enforcement by lenders but are actually ‘utterly misguided and spurious’.

There are a number of schemes being promoted at the moment that supposedly protect borrowers in arrears from enforcement by their lender.

Simple retention of title clauses are commonplace and generally effective in contracts for the sale of goods. However, extending their effect to the proceeds of sale of such goods requires careful drafting.

The Court of Appeal has provided some further clarity around the creation and effects of fiduciary obligations in relation to such clauses.[1]

Proceeds of sale clauses

The High Court has reiterated that cross-examination will not generally be permitted on an interlocutory application, or where there is no conflict of fact on the affidavits.

In McCarthy v Murphy,^[1] the defendant mortgagor was not permitted to cross-examine the plaintiff (a receiver) or a bank employee who swore a supporting affidavit.

Background

Two recent judgments have brought further clarity in relation to the rights acquirers of loan portfolios to enforce against borrowers:

In AIB Mortgage Bank -v- O'Toole & anor [2016] IEHC 368 the High Court determined that a bank was not prevented from relying on a mortgage as security for all sums due by the defendants, despite issuing a redemption statement which omitted this fact.

In order to understand this case, it is necessary to set out the chronology of events:

Bankruptcy law in Ireland is now, broadly speaking, in line with that of the United Kingdom.

In particular, for bankrupts who cooperate with the bankruptcy process:

• bankruptcy will end in one year; and
• their interest in their family home will re-vest in them after 3 years.

Notably however, the courts will have discretion to extend the period of bankruptcy for up to 15 years for non-cooperative individuals and those who have concealed or transferred assets to the detriment of creditors.