Judicial comments cast doubt on the ability to compromise US law-governed debt effectively based on Chapter 15 recognition alone.

BTI 2014 LLC (Appellant) v Sequana SA and Others (Respondents)

Summary

The UK Supreme Court has, for the first time, considered the existence, content and engagement of an obligation on directors to take into account the interests of creditors when a company becomes, or is on the cusp of becoming, insolvent (otherwise known as the “creditor duty”).

In a new ruling, the UK Supreme Court concluded that the rule applies only when a company is "insolvent or bordering on insolvency".

On 5 October 2022, the UK Supreme Court handed down judgment in BTI 2014 LLC v. Sequana SA and others (Sequana)1. The case required the court to reconcile differing judicial pronouncements of the "creditors' interest rule" (the Rule) and consider the following questions:

Key Takeaways

The restructuring plan regime - including, for the first time under English law, cross-class cram down - was introduced in June 2020. Our experience with restructuring plans proposed to-date has been that the English courts have (for the most part) implemented this new tool flexibly, pragmatically and commercially.

The restructuring plan regime - including, for the first time under English law, cross-class cram down - was introduced in June 2020. Our experience with restructuring plans proposed to-date has been that the English courts have (for the most part) implemented this new tool flexibly, pragmatically and commercially.

The court's decision in In re Imerys Talc America, Inc. clarifies the appointment standard for future claimants representatives in the Third Circuit under Section 524(g) of the US Bankruptcy Code.

In a precedential decision, the US Court of Appeals for the Third Circuit upheld the appointment of James L. Patton, Jr. as the legal representative for future talc claimants (FCR) by the bankruptcy court in the Imerys Talc America chapter 11 cases.1

Having trouble reading this email? View it in your browser August 2022 SHARE THIS In this edition of Restructuring Watch, we reflect on: • The first restructuring plan to cram down HMRC. • Recent government reports on certain UK restructuring processes and learnings from the first six-months of the National Security and Investment Act 2021. • Government consultations on a crypto special administration regime and prospective additions to the cross-border recognition and insolvency framework. • A reminder of the recent important milestone in the Galapagos cross-border insolvency battle.

On 30 June 2022, the English court handed down judgment and made a winding-up order in respect of Galapagos S.A., marking an important milestone in an almost three-year cross-border insolvency battle involving the English, German and European courts.

The decision also provides helpful guidance on the application of the Recast European Insolvency Regulation post-Brexit, as well as the extent to which pre-Brexit jurisprudence should still be considered retained in, or relevant to, English law.

Galapagos: The Facts

Judicial comments cast doubt on the ability to compromise US law-governed debt effectively based on Chapter 15 recognition alone.

Insolvency officeholders may need clearance upon appointment to entity in an affected sector.