Businesses need to have written protocols in place to deal with bankruptcy filings by their employees and independent contractors, or they risk serious sanctions and, potentially, punitive damages for violations of the bankruptcy laws. Consider two examples.
The Board of Governors of the Federal Reserve System (the "Federal Reserve") recently issued a proposed rule (the "Proposed Rule") that would significantly limit derivative counterparty remedies upon the insolvency of US global systematically important banking organizations ("GSIB") and their affiliates and the US operations of foreign GSIBs (collectively, "Covered Entities").
Since April, two bankruptcy courts have refused to enforce limited liability company ("LLC") agreement provisions requiring the respective LLCs to obtain the unanimous consent of their members in order to seek bankruptcy relief.1 On June 3, 2016, the Bankruptcy Court for the District of Delaware (the "Delaware Bankruptcy Court") relied on federal public policy to invalidate an LLC agreement provision requiring unanimous member consent to file bankruptcy where the member at issue owed no fiduciary duties to the LLC and the member's primary relationship to the
Recent piece-meal amendments to the Spanish Insolvency Act 2003 seem to have cumulated into a restructuring solution that is starting to be considered predictable, quick and fair, especially when compared to the pre-amendment system. With its new restructuring approach, which shares many of the same characteristics as an English Scheme of Arrangement, Spanish companies have finally been given much-needed space and time to develop an appropriate restructuring strategy.
While the CIS nations have recently provided a multitude of sizeable restructuring cases, the region’s dominant force, Russia, has stood up reasonably well to lengthy economic decline, economic sanctions and the collapse of oil and gas prices. There are now signs however, that its complex troubles are pushing certain companies towards a restructuring or insolvency position.
In light of the UK’s cram down and director-friendly processes, in particular its scheme of arrangement model, major European economies such as France, Germany and Italy have worked hard to develop regimes that give greater emphasis to pre-insolvency alternatives. These new regimes create cram down mechanisms and encourage debtor-in-possession (DIP) financings, ultimately aiming to make restructuring plans more accessible, more efficient, and crucially more reliable; essentially more in tune with the Anglo-American approach to insolvency and restructuring.
Much like the English Scheme of Arrangement which has become a popular debt restructuring solution for international debtors, the English High Court is an attractive forum for insolvency litigation thanks to the potent combination of wide-ranging powers available to Insolvency Practitioners (IPs) under the Insolvency Act 1986, and the increasing availability of litigation funding arrangements in the London market.
Liability management exercises (“LMEs”) are increasing in the bond and capital market and are often used in relatively benign situations. They are certainly not always a precursor to a full-scale restructuring or insolvency.
Prior to the recent collapse in oil values, prices existed at over $100 a barrel for over three years. It made the economics of oil exploration, production and sale comparatively straightforward, but embedded costs into the industry.
Earlier this month, teen clothing retailer Aéropostale filed for Chapter 11 bankruptcy protection, seeking to immediately close 154 of its over 800 stores located throughout the United States and Canada. Many of these stores are located in smaller shopping malls, which have been hit the hardest by the shift to online shopping.
The continued march of retail bankruptcies since 2015 includes Sports Authority, Vestis Retail Group, Inc. (the operator of Sports Chalet, Eastern Mountain Sports, and Bob’s Stores), Radio Shack, American Apparel, Quicksilver, Wet Seal, Delia’s and PacSun.