The Hong Kong court has held that, in determining whether it should exercise its jurisdiction to sanction a scheme of arrangement in respect of the debts of an insolvent foreign company, the factors to take into account include whether any of the debts are governed by Hong Kong law, such that they would be discharged by an order sanctioning the scheme, and whether sanctioning the scheme would foster comity.
Schemes of arrangement (“schemes”) have become the restructuring tool of choice for English companies or overseas companies that have English law-governed debts.
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The UK Supreme Court judgment in BNY Corporate Trustee Services Limited and others v Eurosail-UK 2007-3BL PLC [2013] UKSC 28 was handed down on 9 May 2013. It considered: (a) the meaning of the balance sheet insolvency test as laid out in section 123(2) of the UK Insolvency Act 1986 (the "Act"); and (b) the legal effect of a post-enforcement call option ("PECO") and, in particular, whether the existence of a PECO is relevant to an assessment of balance sheet insolvency.
In preparing a statement supporting the determination that recusal from a bankruptcy proceeding was unnecessary, U.S. Bankruptcy Court Judge Richard E. Fehling quoted Master Sergeant Georg Hans Shultz from the television sitcom Hogan’s Heroes: “I KNOW NOTHING! NOTHING!”
Criminal defendants facing onerous restitution obligations as part of their sentence might contemplate a bankruptcy filing, in the hope of staving off the restitution obligation. In a case of first impression, the Second Circuit recently considered whether the Bankruptcy Code’s automatic stay provision halts a defendant’s obligation to pay restitution and firmly closed the door on that potential gambit.
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Presumed Reasonable Absent Certain Circumstances
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I just had an interesting discussion with a partner on the subject of the sale of exempt property in bankruptcy. We concluded that even though tenant by the entireties real estate might be exempt from creditor claims in some states, nonetheless in bankruptcy it is still property of the estate under Bankruptcy Code section 541 and subject to the bankruptcy trustee’s general powers of sale under Code section 363(b). The analysis goes like this: section 541 creates a bankruptcy estate that includes all interests of the debtor in property without mention of exemptions, and sec