It is now two years since the 30 April 2021 introduction of the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (the "Regulations") and a good time to look back at whether the Regulations have achieved their purpose, what issues remain and what the next two years might look like.

Summary

Key Points

Key Points

On March 17, 2023, the parent of Silicon Valley Bank (SVB) filed for Chapter 11 protection in the Southern District of New York. Unlike SVB itself, its parent, as a bank holding company, was eligible for Chapter 11. In the wake of the recent SVB and Signature Bank failures, it is important for those with potential claims against the parents of failed banks to understand the distinct rules and issues in bank holding company bankruptcies.

The Bank of England (BoE) has announced that Silicon Valley Bank UK Limited (SVB UK) will be sold to HSBC UK Bank Plc (HSBC). This is being carried out under the aegis of the Special Resolution Regime (SRR) — a bespoke pre-insolvency regime applicable to failing banks¹ — set forth in the Banking Act 2009 (the Act).

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

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

Key Points

Key Points

Hong Kong Airlines (HKA) has announced that it is seeking to implement a restructuring of its aircraft lease obligations and other liabilities by court action in the UK and Hong Kong.

The plan proposes to give aircraft lessors a right to an upfront cash recovery — of about 5 percent of their claims (or in the case of lessors of aircraft being retained, the right to elect equity in the restructured HKA) — and potential future payouts starting in 2028 tied to the future earnings of the airline.

Key Point

• The UK government's proposals to only partially implement a new UNCITRAL Model Law means that creditors of English law debts who do not consent to a foreign restructuring proceeding will still have recourse to enforcing their rights against the debtor's UK-based assets.

English Law Is Still a Special Situation