Introduction This briefing complements our other publications on corporate restructuring and the sale or purchase of distressed assets.  

What are the options for companies in financial difficulty in the PRC?  

On December 29, the UK Treasury published a summary of responses to its consultation on its proposals to reform Part 7 of the UK Companies Act 1989 and related legislation. Part 7 of the Companies Act 1989 modifies the UK’s general insolvency law to provide systemic protection for recognized investment exchanges and recognized clearinghouses in the event of a default by one of their members  

The Securities and Exchange Commission brought an action against several individuals and related investment entities (the Wextrust Entities) who allegedly participated in a Ponzi scheme that purportedly defrauded over 1,000 investors of approximately $255 million.

On January 8, Senator Richard Durbin (D-IL), Senator Christopher Dodd (D-CT), Senator Charles Schumer (D-NY) and Representative John Conyers (D-MI) announced an agreement with Citigroup on legislation that would allow homeowners in bankruptcy to alter the terms of their mortgages. Citigroup has agreed to support the "Helping Families Save Their Homes in Bankruptcy Act," introduced by Senator Durbin on January 6, along with a companion bill that was introduced on the same day in the House of Representatives by Representative Conyers.

Summary  

The international banking crisis has hit hard. German banks and companies are also affected. This briefing provides an insight on questions that are typically raised when persons are exposed to insolvency situations which involve proceedings initiated in Germany or abroad but have a connection to Germany in certain aspects.  

When does German Insolvency Law apply?  

Introduction  

Current turbulent times and the onset of recession are likely to result in an increase in the number of distressed sales and ultimately insolvencies. For those who are fortunate to be in the market as buyers, there may be considerable opportunities but equally there are significant traps for the unwary. This briefing examines some of the key issues which should be considered by prospective buyers of businesses in financial difficulties which are not in formal insolvency proceedings.  

What is a debt restructuring?

The aim of any restructuring (also sometimes called a workout) is to rearrange the debtor’s financial commitments so that it is able to service its restructured debts and survive as a going concern. It is important to note that this is a consensual process and is not undertaken under the supervision of a court or other supervisory body - therefore, it is important the all creditors are involved.  

If it’s voluntary, how does it work?

On November 13, 2008, Lehman Brothers Holdings Inc. and its U.S. affiliates in bankruptcy, including Lehman Brothers Special Financing and Lehman Brothers Commercial Paper (collectively, “Lehman”) filed a motion asking that certain expedited procedures be put in place to allow Lehman to assume, assign or terminate the thousands of executory derivative contracts to which they are a party.

Plaintiff, the trustee of the Chapter 7 estate of Security Asset Capital Corporation (SACC), a corporate debtor, brought an action against the debtor’s officers and directors, alleging that they breached their fiduciary duties by failing to commence Chapter 7 liquidation once SACC became insolvent.

Introduction

Following the administration proceedings recently instituted against a number of UK entities (Affected Companies), many counterparties (Counterparties) may wish to terminate transactions under the TBMA/ISMA Global Master Repurchase Agreement (GMRA) entered into between them and Affected Companies.