The government has now announced that the remaining temporary restrictions created by the Corporate Insolvency and Governance Act 2020 are being lifted and that the insolvency regime will return to its pre-pandemic position with immediate effect from 1 April 2022. This includes removing the temporary restrictions placed on creditors when presenting winding-up petitions against debtors who are unable to pay debts they owe.
On 10 March 2022, the UK High Court held the adjourned sanction hearing regarding Smile Telecoms Holdings Limited’s (“Smile”) second proposed restructuring plan. Despite Smile Telecoms’ first restructuring plan being sanctioned by the UK High Court back in March 2021, the African telecommunications company still faced liquidity shortages. This prompted the company to propose a second restructuring plan under Part 26A of the UK Companies Act 2006 (the “Companies Act”). The second restructuring plan would see the Smile Telecoms’ group senior secured lender, 966 CO S.a. r.l.
This week, the Ninth Circuit takes a close look at a sizable antitrust jury award, and explains what constitutes a tax “return” for purposes of bankruptcy law.
OPTRONIC TECHNOLOGIES, INC v. NINGBO SUNNY ELECTRONIC CO. LTD.
The Court held that sufficient evidence supported a jury verdict holding telescope manufacturers liable for antitrust violations.
This update summarises the latest jurisprudence on insolvent schemes of arrangement (schemes) and restructuring plans (RPs), and provides an overview of the key themes that are emerging in this area.
Key Concepts and Notes
This week, the Ninth Circuit explains the ins-and-outs of property abandonment under the Bankruptcy Code, and explores the government’s privilege to withhold the identity of informants in discovery.
On 16 September 2021, the Hong Kong Court made an unprecedented ruling by recognising, for the first time, proceedings for the reorganisation of the HNA Group Co Limited (‘Company‘) commenced in Mainland China under the Mainland Enterprise Bankruptcy Law (‘Mainland Reorganisation Proceedings’) (Re HNA Group Co Limited [2021] HKCFI 2897).
John Quicler, a senior associate within our Banking and Finance Litigation team, sets out the recent changes in relation to the presentation of winding-up petitions following the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) Regulations 2021 (SI 2021/1029), which came into force on 29 September 2021.
Background
The Hong Kong High Court has handed down its first decision under the pilot measure in relation to the cooperation mechanism for mutual recognition of, and assistance to, insolvency processes between Mainland China and Hong Kong, in Re Samson Paper Company Limited [2021] HKCFI 2151.
Cooperation mechanism
Many investors, including PE firms, are waiting with bated breath to see how the UK economy, currently dependent on COVID-19-related government support, will respond once that stimulus is withdrawn. An increase in UK company insolvencies is expected, creating opportunities for savvy investors to acquire businesses at bargain prices, while at the same time appearing to be white knights swooping in to save a beloved high street brand or large regional employer.
On 8 July 2021, the Payment and Electronic Money Institution Insolvency Regulations 2021 (the Regulations) will come into force in the UK and introduce a new special administration regime for insolvent payment institutions (PIs) and electronic money institutions (EMIs). The key purposes of the Regulations are to ensure that, if a PI or EMI becomes insolvent (and/or it is fair or expedient to put the institution into special administration), funds are quickly returned to customers and any shortfalls in the amounts available are minimised.