At the Commodity Futures Trading Commission (CFTC) open meeting on April 14, the CFTC unanimously approved proposed amendments to Part 190 of its rules governing bankruptcy proceedings of commodity brokers, including futures commission merchants (FCMs) and derivatives clearing organizations (DCOs). The proposed amendments are intended to comprehensively update Part 190 to reflect current market practices. Among other revisions, the proposed amendments to Part 190 would:
Background
In the 2018 Autumn Budget, the Chancellor announced his intention to reintroduce Crown Preference with effect from 6 April 2020. Due to the attempts to prorogue Parliament and the General Election last year, the necessary legislation was not passed. However, it has now been introduced in the Finance Bill 2020, with the later start date of 1 December 2020.
Australian satellite-based IoT startup Sky and Space Global Ltd. filed for Voluntary Administration in Australia, the equivalent of a Chapter 11 bankruptcy in the United States. April 13 – OneWeb Global Ltd. (OneWeb), which filed for Chapter 11 bankruptcy protection in the United States last month, announced that it secured a commitment from its largest secured creditor, SoftBank Group Corp., to provide up to $75m in debtor-in-possession (DIP) financing to fund its ongoing operations during the bankruptcy proceeding. The DIP financing proposal was approved
Cash flow and current and future liquidity are now real concerns for many businesses during this COVID-19 pandemic. Increasingly, the attention of directors and the wider economic ecosystem is turning to consider the issues of approaching insolvency and the duties of directors.
In line with the current approach of the UK Government to support businesses, on Saturday, 28 March, the Business Secretary, Alok Sharma, announced that UK wrongful trading insolvency laws are to temporarily change to help give businesses and directors some "breathing space".
On 28 March 2020, the UK government announced it would be implementing new measures to improve the insolvency system aiming to, amongst other things, support businesses under pressure as a result of the COVID-19 outbreak and resulting restrictions.
Government support package – relaxation of insolvency rules
The German Federal Government has resolved upon a draft bill for the mitigation of the consequences of the SARS-CoV2- Virus (COVID-19) pandemic (the “Proposed Legislation”). One of the goals of the Proposed Legislation is to prevent insolvencies of companies which encounter financial difficulties as a result of the ongoing COVID-19 pandemic. The Proposed Legislation goes well beyond the earlier announcement made by the German Federal Department
Proposed Legislation to avoid COVID-19-related Insolvencies in Germany
California Governor Gavin Newsom signed Assembly Bill 1054 into law today, marking a significant financial commitment by the state to shore up the financial position of California's major investor-owned utilities. The new law establishes a Wildfire Fund of up to $21 billion to provide liquidity for utilities to cover eligible, uninsured third-party damage claims resulting from future catastrophic wildfires. The law also establishes a new framework to encourage and certify utility safety practices intended to reduce the risk of wildfires ignited by power infrastructure.
Windstream Holdings, Inc.’s (“Windstream”) chapter 11 bankruptcy filing following its contentious litigation with Aurelius Capital Management LP (“Aurelius”) has rekindled market participants’ concerns over the effects of so-called “net short debt activism” – the efforts of creditors who, despite holding a borrower’s debt, seem motivated to push the borrower into distress over covenant or other defaults.
In an 8-1decision issued on May 20, the Supreme Court held that rejection of an executory trademark license agreement in a bankruptcy of the licensor is merely a breach, and not a termination or rescission, of the agreement. The licensee retains whatever rights it would have had upon a breach of the agreement prior to bankruptcy and can continue to use the trademarks pursuant to its contractual rights under applicable law. Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. ___, No. 17-1657 (May 20, 2019).
Background
What Is the "Rule in Gibbs"?
The rule in Gibbs is a long-established common law principle in which the Court of Appeal determined that a debt governed by English law cannot be discharged or compromised by a foreign insolvency proceeding(Anthony Gibbs and Sons v La Société Industrielle et Commerciale des Métaux (1890) 25 QBD 399). The rule in Gibbs remains a fundamental tenet of English insolvency law.
Why Does the Rule in Gibbs Matter?