Venezuela’s initiative is unlikely to set the stage for a restructuring of international obligations in the face of US sanctions.
Key Points:
• US sanctions will prohibit US persons from engaging in a restructuring of Venezuela and PdVSA debts that includes the issuance of “new” long term debt.
• Creditors should expect that enforcement action will follow a default. The outcomes of that enforcement action will affect all stakeholders, whether or not they participate.
Restructuring Announcement
Ruling overturns New York decision rejecting market-based approach.
Key Points:
• Court of Appeals for the Second Circuit requires courts to consider efficient market interest rate, if available, for purposes of chapter 11 “cramdown.”
• Second Circuit decision overturns lower court ruling that used “formula approach” to determine appropriate chapter 11 cramdown interest rate.
Cross-border debtors gain another tool to use against dissident creditors seeking to disrupt foreign restructuring proceedings.
Introduction
Ultra court clarifies the requirements for classifying a creditor as “unimpaired” under a plan of reorganization.
Key Points:
• Texas bankruptcy court splits from Third Circuit in finding that a creditor must receive everything it is entitled to under non-bankruptcy law in order for the creditor to be “unimpaired.”
• The decision does not require that unsecured creditors receive post-petition interest but provides that they will be “impaired” if they do not
We are now past the second tranche of changes under the Insolvency Law Reform Act 2016 (Cth), comprised most importantly of Part 3 of the Insolvency Practice Schedule (IPS) (containing the General Rules relating to external administrations) which came into effect on 1 September 2017.
Part 3 of the IPS will apply to external administrations that start on or after 1 September 2017.
- On 18 September 2017 the Treasury Law Amendment (2017 Enterprise Incentives No. 2) Act 2017 (the Safe Harbour and Ipso Facto Act) became law.
- The Safe Harbour reforms introduced in the Safe Harbour and Ipso Facto Act create a safe harbour for company directors from personal liability for insolvent trading if the company is undertaking a restructure outside formal insolvency processes.
Division 65 and the New Strict Liability Regime
As part of the significant reforms to insolvency and bankruptcy laws introduced by the Insolvency Law Reform Act 2016 (ILRA), parliament has sought to condense and simplify the requirement for external administrators to avoid conflicts of interest.
Whether you are a liquidator, director, employee, shareholder or creditor of a company in financial distress, the experience of a corporate insolvency is usually not pleasant. Directors face the threat of being investigated for breaches of directors duties, employees become unemployed, shareholders become the owners of worthless assets and creditors are forced to come to the realisation that they will never see the money owed to them (or at least not all of it).
We all know that Australians have an unhealthy obsession with owning their own home. And with house prices surging over the past 5 years there is every right to be obsessed. But why sacrifice so much to purchase your dream home only to watch it fall into the hands of creditors?