This alert provides background on the failure of Silicon Valley Bank and explains significant recent developments, including the subsequent failure of Signature Bank and the U.S. government’s announcement that the Federal Deposit Insurance Corporation (FDIC) will make whole all depositors of both institutions. This alert also describes the new program simultaneously announced by the Federal Reserve to provide additional liquidity to the banking industry.

Run on Silicon Valley Bank

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.

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:

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.

On December 27, 2022, the IRS issued two notices providing key initial guidance for the new excise tax on corporate stock buybacks and the new corporate alternative minimum tax (CAMT). Both the excise tax and the CAMT were enacted as part of the Inflation Reduction Act that Congress passed in August 2022.¹

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.

The Supreme Court of the United Kingdom (“SC”) has recently handed down a decision in the case of BTI v Sequana, dealing with the powers and duties of company directors. The appeal was expected to be of considerable importance.

This alert is especially relevant to companies, and directors of companies, in financial distress, as well as creditors and insolvency practitioners.

Key Takeaways

In New York, it is a standard practice to name all tenants residing in a building when foreclosing upon the property.

On July 7, 2022, the UK Insolvency Service, an executive agency of government responsible for a variety of roles in administering the UK insolvency regime, published a consultation on the UK’s proposed adoption of two UNCITRAL Model Laws on insolvency, inviting responses (the “Consultation”).