In Li Yiqing v Lamtex Holdings Ltd [2021] HKCFI 622, the Companies Court considered whether to put a Bermuda-incorporated company into immediate liquidation in Hong Kong or to adjourn the local winding-up petition to allow restructuring to proceed with the involvement of joint provisional liquidators appointed in Bermuda.

It is well known in the restructuring world that a debtor in bankruptcy can’t get a PPP loan. But what if you’re a debtor and decide a PPP loan could save your business? Will a court dismiss the case so you can seek a loan?

On Wednesday, February 23, just after 5:00 p.m., Belk, Inc. – a North Carolina-based department store chain – and its affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code. Less than 24 hours later, Bankruptcy Judge Marvin Isgur of the United States Bankruptcy Court for the Southern District of Texas entered an order confirming Belk’s Chapter 11 plan.

Public policy, “No-Action” and arbitration clauses, and the substitution of petitioners

Background

Bonds that are traded via clearing houses, such as Euroclear and Clearstream, often contain terms providing that there will be a trustee for the issue, who may be appointed by the participants in the relevant clearing system or by the beneficial owners.

Does a debtor’s pre-petition change of the beneficiary of a life insurance policy constitute a “transfer” of an interest of the debtor in property? Not according to the U.S. Bankruptcy Court for the Eastern District of North Carolina, which held earlier this week that such transfers do not “diminish” the estate.^[1]

Correcting a widespread mistake, Mr Justice Harris in Re China Ocean Industry Group Ltd [2021] HKCFI 247 held that the Court has no jurisdiction to make a validation order after a winding-up petition in respect of the issue of new shares and convertible bonds (“CBs”).

The correct position is that a company subject to a winding-up petition may issue new shares and CBs without a validation order.

Background to the widespread mistake and the present case

In the landmark case of Re China Huiyuan Juice Group Limited [2020] HKCFI 2940, Mr Justice Harris recalibrated the Hong Kong winding-up jurisdiction and its application to an offshore incorporated, Hong Kong-listed entity.

In particular, the decision explains why the Hong Kong court may be unable to wind up an offshore incorporated, Hong Kong-listed company where all of the company’s operating assets are in the Mainland.

The material facts

A seat at the table: this is what you likely want when your financial interests are drawn into a bankruptcy court proceeding. You’ll seek to be heard and do what you can to maximize your recovery. This is especially true if you’re a creditor in a chapter 11 case. Yet a recent decision shows what can happen if you do the opposite and choose to “sit one out” rather than have a say in the outcome of a chapter 11 case. In re Fred Bressler, No. 20-31023, 21 WL 126184 (Bankr. S.D. Tex. Jan. 13, 2021).

Perfect your liens on time or you may lose them. That’s the painful lesson U.S. Bankruptcy Judge Karen B. Owens taught Halliburton Energy Services, Inc. in her recent decision.

Ruling on plaintiff-debtor Southland Royalty Company LLC’s motion for partial summary judgment, Judge Owens found that Halliburton did not obtain a lien on Southland’s production of oil, natural gas, or their proceeds. In re Southland Royalty Co., LLC, 20-10158 (KBO) at 1 (Jan. 21, 2021, Bankr. D. Del.) (the “Opinion”).

In recent years, it has become increasingly common for companies seeking to avoid an immediate winding-up order, particularly listed companies, to pray in aid of alleged efforts to restructure its debts in a bid to obtain adjournments of a winding up petition.