The March 2023 banking crisis has been an unexpected “stress test” for dealing with liquidity issues.
When state regulators closed Silicon Valley Bank this past Friday, many startups understandably faced severe liquidity issues triggered by the sudden and unexpected loss of access to their deposits.
GIVEN THE RECENT NEWS REGARDING SILICON VALLEY BANK, RICHARD OMAN LOOKS AT THE IMPACT THAT LENDER INSOLVENCY HAS ON LOAN FACILITIES AND WHAT BORROWERS AND LENDERS NEED TO CONSIDER.
BACKGROUND
The Part 26A Restructuring Plan (“RP”) is a relatively new addition to the English insolvency regime; despite this, the flexibility it provides to both distressed companies and their creditors has made it an important and attractive option. The recent administration of GoodBox Co Labs Limited (“GoodBox”) only further highlights this flexibility, providing ground-breaking precedent for creditor‑led RPs and the necessity of company consent.
KARL CLOWRY, SEÁN MCGUINNESS, AND AZIZ ABDUL LOOK TO THE LESSONS FOR SHAREHOLDERS, CREDITORS AND ADMINISTRATORS FROM THE FIRST CREDITOR LED RESTRUCTURING PLAN.
The Good Box Co Labs Limited (in Administration) case demonstrates once more the viability of the process for the mid-market and continues a trend of RPs being used by a determined creditor / shareholder constituency to rescue an equity investment within an existing corporate group. In short, the mid-market RP is still a highly situational, albeit flexible, tool."
In Grant & Ors v FR Acquisitions Corporation (Europe) Ltd & Anor (Re Lehman Brothers International (Europe)) [2022] EWHC 2532 (Ch), the English High Court ruled on an application for directions (the “Application”) made by the administrators (the “Administrators”) of Lehman Brothers International (Europe) (LBIE) relating to the construction and effect of certain bankruptcy-related events of default (“Events of Default”) specified under the ISDA Master Agreements (as defined below), specifically:
DO YOUR DIRECTORS HAVE SUFFICIENT TOOLS AVAILABLE TO ALERT THEM TO CIRCUMSTANCES THAT COULD INDICATE FINANCIAL DIFFICULTIES IN A COMPANY AND ASSIST THEM IN ANY FUTURE RESTRUCTURING DECISIONS?
Good Financial tools will enhance Directors' understanding the company's financial position and alert them to any early signs of potential financial difficulties.
FINANCIAL DIFFICULTIES
On January 4, 2023, Judge Glenn of the United States Bankruptcy Court for the Southern District of New York issued a much-awaited decision in the Celsius Network LLC (along with its affiliated debtors, “Celsius” or the “Debtors”) chapter 11 cases relating to the ownership of crypto assets deposited by customers in the Celsius “Earn” rewards program accounts.
In this client alert we set out some of the key lessons from the recent judgment in ABT Auto Investments Ltd v Aapico Investment Pte Ltd [2022] EWHC 2839 (Comm), which considers the validity of appropriation as an enforcement power pursuant to Regulation 17 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (“FCARs”), the duty imposed on a collateral-taker by Regulation 18 of the FCARs in connection with the valuation of a collateral subject to appropriation, and provides useful guidance on what is “commercially reasonable” in this context.
Over the span of two weeks in July 2022, two of the largest retail-facing cryptocurrency platforms, Celsius and Voyager, filed for chapter 11 bankruptcy protection.
TODAY, THE EAGERLY-AWAITED JUDGMENT HAS BEEN HANDED DOWN BY MR JUSTICE ZACAROLI IN RESPECT OF THE APPLICATION FOR DIRECTIONS MADE BY OFFICE-HOLDERS OF A NUMBER OF FAILED ENERGY SUPPLIERS.
The impact of this judgment will be felt much wider than just within the applicants' insolvent estates and it is relevant to any office-holder or unsecured creditor of a failed energy supplier.