With increased stress in global, domestic, and regional economies, the number of Australian businesses at risk of bankruptcy is approaching a three-year high.
On 15 May 2023 (with Reasons for Decision delivered on 18 May 2023), the Companies Court made a winding-up order against Dangdai International Investments Ltd (當代國際投資有限公司) (“the Company”) which is in turn wholly owned by Wuhan Dangdai Science & Technology Industries (Group) Company Ltd (武漢當代科技產業集團股份有限公司) (“Wuhan Dangdai”).
What can we say about the outcome of the GAS (Great Annual Savings Company Limited) sanction hearing that hasn’t already been reported?
It’s impossible not to comment on the fact that the plan was not sanctioned, and as a consequence of fierce opposition from HMRC that it avoided cram down. Nor that the court refused to sanction the plan on the basis that the conditions for cram down were not met – the court was not satisfied that HMRC would be better off under the plan and even if it were the judge said he would have not exercised his discretion to cram down.
The Facts – Shortly Stated
The recent case of Dolfin Asset Services Ltd v Stephens & Anor (Re Dolfin Financal (UK) Ltd) [2023] EWHC 123 (Ch) (“Dolfin“) concerned a special administration, but it has relevance to administrators more generally. In particular, when it comes to the judge’s view of what is meant by the word “consider” – which is phrase used in the insolvency legislation when it comes to making decisions.
In a decision likely to be welcomed by both debtors and lenders, the High Court has held that a charge granted by Avanti Communications Limited (“Avanti”) was properly characterised as a fixed charge (rather than a floating charge) notwithstanding that the chargor retained an element of control over the charged assets. A key plank of the decision was that the relevant assets were not ‘fluctuating assets’ or ‘stock in trade’ that the chargor might be expected to dispose of in the ordinary course of its business.
在终审法院最新颁布的 Re Guy Kwok-hung Lam[2023] HKCFA 9突破性裁决中，终审法院驳回了该案的上诉，并且在判词中就专属管辖权条款（EJC）是否对提交破产呈请有影响这一棘手问题作出裁决，平息了长期对于相关议题的争论。
简而言之，终审法院认可上诉法院大多数法官对于本案的观点，认为一般来说，如果呈请债务的基础争议受制于专属管辖权条款，除非有其他反面因素存在（例如债务人破产的风险将会影响第三方、债务人的呈请以几乎无意义的争议为基础，或者发生滥用法律程序的情况等）， 则法院应驳回该破产呈请。
终审法院在裁定中指出，当只有一名债权人提出破产呈请，而没有证据表明全体债权人都面临风险时，破产制度背后的公共政策因素的重要性则显着降低。
这一裁定反映了法院非常重视当事人自治的原则，以及当事人之间自由达成的协议。该判决将会对破产领域产生深远的影响，以及对处理清算及破产呈请中的仲裁条款产生涟漪效应。
In the latest ground breaking decision in Re Guy Kwok-hung Lam[2023] HKCFA 9, the Court of Final Appeal dismissed the appeal and laid to rest a long-standing debate on the vexing question concerning the impact, if any, exclusive jurisdiction clauses (EJCs) have on the presentation of bankruptcy petitions.
There are a number of options and avenues that a company can explore when faced with business stress or distress. Depending on the circumstances, a combination of these could be appropriate to help mitigate or avoid a business failing.
This guide provides an overview of potential options and should be considered alongside specific advice from the company's advisors.
Informal Options
Even when informal options are being considered, directors should engage with their advisors and stakeholders to ensure that their decisions take into account their directors' duties.
Yesterday saw the end of a three-day sanction hearing for the restructuring plan (the “Plan”) of the Great Annual Savings (GAS) company, with Justice Adam Johnson reserving his judgment and importantly, his decision on whether to exercise cross-class-cram-down to sanction the Plan for a later date.