In response to the coronavirus (COVID-19) pandemic, US bankruptcy courts have granted extraordinary equitable relief in some cases. As government orders enforcing stay-at-home measures have forced many businesses to shutter indefinitely, bankruptcy courts have implemented procedures to allow the ongoing—albeit virtual—administration of bankruptcy cases.

A Roll of the Dice: Mothballing Bankruptcy Cases Under 11 USC § 305(a)

With effect from 6 April, the UK government has increased the “prescribed part”—a portion of floating charge realisations that is set aside for unsecured creditors on a company’s insolvency—from £600,000 to £800,000.

Prescribed Part

The measures include temporarily suspending wrongful trading liability for directors and implementing a new restructuring plan and moratorium to provide companies with a period of time to explore rescue options during the coronavirus (COVID-19) pandemic.

In response to the COVID-19 virus, Canada’s federal government has restricted non-essential travel and closed the US border. Canada’s provincial governments have enacted highly restrictive measures including mandating the closure of facilities providing recreational programs (i.e. gyms), libraries, public and private schools, licensed childcare centres, bars and restaurants, theaters, cinemas and concert venues, and the list goes on. Some provinces have also banned gatherings of more than 5 people and prohibited all non-essential businesses.

On March 17, 2020, the Court of Appeal of Québec (the "Court") issued an important ruling concerning "pre-post" compensation and "non-dischargeable" debts under the Companies' Creditors Arrangement Act (the "CCAA"), by finding that the debt of a municipality arising from an agreement entered into as part of a voluntary reimbursement program ("VRP") under the Act to ensure mainly the recovery of amounts improperly paid as a result of fraud or fraudulent tactics in connection with public contracts ("Bill 26") is unsecured debt in connection with the insolvency of a co-contra

Somewhere close to Sandton – Africa’s richest square mile – lies the suburb of Parkmore in the Gauteng Province. This is the principal place of business of a debtor that cannot pay its debts, and is facing the barrel of an application for its winding-up. The debtor’s registered address is in Mbombela within the province of Mpumalanga – close to Africa’s Big Five game. Two court options come into play.

South African state-owned enterprises (SOEs) are coming under tremendous pressure to do something to extricate themselves from their financial woes. Any kind of bankruptcy event cannot be the answer: because of the obvious cross-default impact such a declaration will have on various debt and other instruments in the capital markets. It will also be catastrophic to the Government’s standing and rating in the financial markets.

Chapter 6 of the South African Companies Act, 2008, as a corporate restructuring regime, provides a formal restructuring tool for financially distressed (which exists when a company is unable to pay its debts as they fall due (cash-flow insolvency) or when a company’s liabilities exceed the value of its assets (balance-sheet insolvency) or when those events are likely to occur in 6 months (imminent insolvency) companies.

The latest amendments to the Kazakhstan Rehabilitation and Bankruptcy Law were signed on April 2, 2019, and became effective from April 14. The amendments enhance the priority right of secured creditors through the acceptance of pledged assets in kind or the implementation of self-facilitated foreclosure over pledged assets. Notably, the law provides that pledged assets are carved out from bankruptcy estates.

Priority of Claims of Secured Creditors

To exercise a priority right, a secured creditor must comply with the following procedure:

Today, amendments to the Bankruptcy and Insolvency Act (BIA)and the Companies’ Creditors Arrangement Act (CCAA), introduced to Parliament in April 2019 as Bill C-97, came into force. Certain of these amendments are likely to impact the usual flow of business among insolvency and restructuring professionals.