In a recent case, the Victorian Supreme Court said that an accountant ‘would know well that a statutory demand involves strict time frames for response and potentially very significant consequences for a company’. The accountant failed to take appropriate steps to inform the company of the statutory demand.

The statutory demand process

If a company does not comply with a statutory demand within 21 days of service, it is deemed to be insolvent and the creditor may proceed to wind up the company.

Amid the current market uncertainties, distressed asset sales are likely to rise. International investors are looking for efficient solutions, preferably ones that reflect solutions in their home jurisdictions. One popular mechanism is the use of pre-pack sales. A pre-pack sale manages the adverse impact of insolvency proceedings on the distressed company’s business, while reducing the time and cost of such proceedings, and offering greater asset realisation to be distributed among creditors.

A recent court decision considers the legal principles and sufficiency of evidence when a court-appointed receiver seeks approval of their remuneration.

A court-appointed receiver needs court approval for the payment of their remuneration. The receiver has the onus of establishing the reasonableness of the work performed and of the remuneration sought.

A consensual resolution among all stakeholders is an important goal of any bankruptcy proceeding. But how can parties reach a consensual deal if financing is drying up quickly and the prospect of confirming a plan is grim? That was the issue facing the Rockport debtors (the “Debtors”) in their Delaware bankruptcy cases styled In re The RP Co. Liquidating, LLC. In this case, the Debtors filed a motion asking the bankruptcy court to approve a global settlement (the “Settlement”) with all parties-in-interest—except the Office of the United States Trustee (the “U.S. Trustee”).

Who owns cryptocurrency held by a cryptocurrency exchange? Do the cryptocurrency assets belong to the customers who deposited the crypto with the exchange, or do the cryptocurrency assets belong to the exchange itself? The answer to this question will have huge significance, both in terms of creditor recoveries as well as preferential transfer liability exposure.

Monitoring Winding up Petitions

While not an everyday occurrence, a company being issued with a winding up petition is an eventuality that all providers of finance, whether on a secured or unsecured basis, will prepare for.

From a contractual perspective, facility agreements will include specific monitoring information covenants as part of the core relationship housekeeping, supported by a hard backstop of event of default triggers, with rights for debt acceleration, and (if applicable) security enforcement operating in tandem from that point.

Routes to Reorganisation

A Comparative Study of the Insolvency Procedures Available in the United Arab Emirates, Kingdom of Saudi Arabia, United States and England and Wales

First published in the INSOL Restructuring Alert (November 2023)

Introduction

The overwhelming majority of my practice has involved larger, complex Chapter 11 cases and out-of-court restructurings, and representing debtors, Chapter 11 trustees, committees or creditors.

When Subchapter V came to be in 2019 under the Small Business Reorganization Act, I honestly did not think that I would have the opportunity to participate in those types of cases due to the debt limitations imposed by statute.

The overwhelming majority of my practice has involved larger, complex Chapter 11 cases and out-of-court restructurings, representing debtors, Chapter 11 trustees, committees, or creditors. However, with the expansion during Covid of the Subchapter V debt limit to $7.5 million, I have found myself participating in multiple Subchapter V cases as counsel to creditors. I discovered quickly that habits developed in larger Chapter 11 cases do not necessarily translate to Subchapter V.

In a recent decision that will add some welcomed clarity to the imposition of Part A1 moratoriums over companies which have been presented with a winding-up petition, the High Court has reflected on the requirements of section A4 of the Insolvency Act 1986 (the “Act”) and confirmed the test that must be satisfied in order for it to make such an order.