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.

Overview

In Highland Capital Mgmt. v. Dondero (In re Highland Capital Mgmt.), Case No. 21-03007-sgj (Bankr. N.D. Tex. 2021), the U.S. Bankruptcy Court for the Northern District of Texas held that a debtor could not be compelled to abide by an arbitration clause in an agreement that was rejected pursuant to Section 365 of the Bankruptcy Code.

Background

Overview

In Hilal K. Homaidan v. Sallie Mae, Inc., Navient Solutions, LLC, Navient Credit Finance Corporation, Case No. 20-1981 (2d Cir. 2021), the Second Circuit affirmed the opinion of the U.S. Bankruptcy Court for the Eastern District of New York, which held that private student loans are not excepted from discharge under Section 523(a)(8)(A)(ii) of the Bankruptcy Code, which excepts from discharge “an obligation to repay funds received as an educational benefit, scholarship, or stipend.” 11 U.S.C. § 523(a)(8)(A)(ii).

Background

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

The Bottom Line

When is an insurance commissioner not a governmental authority? A federal district judge reminds us that a state insurance commissioner, when acting as receiver of an insolvent insurer, acts in a different capacity to his governmental role. This principle can cause an insurance commissioner to fall outside a contractual definition of “governmental authority” even where the definition contains inclusive language on multiple capacities.

In a move largely welcomed by unsecured creditors, on 13 May 2021, the Court of Final Appeal in Hong Kong (CFA) handed down its judgment in Re Hsin Chong Construction Co. Ltd [2021] HKCFA 14 (the CFA Judgment), whereby disposition of a company’s residual rights and interests under a joint venture agreement after the commencement of its liquidation was held to be void.

Facts

Joint Venture

According to the Hong Kong SAR government’s statistics, the Hong Kong economy for 2020 contracted by 6.1% overall, which was the sharpest annual drop on record. The COVID-19 pandemic continues to hit the city’s livelihoods and economic development.