In the recent decision of Re JD (a debtor), the High Court upheld a debtor’s challenge to a lender’s decision to reject a Personal Insolvency Agreement (“PIA”) proposal.

Section 115A of the Personal Insolvency Acts 2012- 2015 (“the Acts”) provides a new mechanism by which a debtor may seek the Court’s approval of a PIA notwithstanding its rejection by creditors.

This case is particularly significant as:

Introduction

With the commencement of the Companies Accounting Act 2017 (“2017 Act”) on 9 June 2017, the priority of charges in liquidations has been dramatically altered.

Judicial Development

The recent judgment in MB Refrigeration and Air-conditioning Limited (in liquidation) –v- Allied Irish Bank Plc [2016] has clarified what constitutes “notice” of the liquidation of a company for creditors and banks alike.

The U.S. Court of Appeals for the Second Circuit issued its ruling in Marblegate Asset Management, LLC v. Education Management Corp. that provided much needed clarity to creditors and issuers involved in out-of-court restructurings affecting noteholders. The issue for the court was whether Education Management Corp. (“EDMC”) violated the Trust Indenture Act (the “TIA”) when it implemented a restructuring that impaired the rights of one of its unsecured noteholders, Marblegate Asset Management, LLC (the “Noteholder”).

ITALY

BANCA MONTE DEI PASCHI DI SIENA SpA

Monte dei Paschi di Siena (“Monte Paschi”) founded in 1472 and said to be the oldest bank in the world is, at the time of publication, in a race against the clock to raise EUR 5 billion in capital by the end of December to avoid either a state bail-out or potentially being wound down by the European Central Bank (“ECB”).

On 1 December 2016, the current president and Socialist leader, Francois Hollande, decided not to seek a second term as President of France. Mr. Hollande is the first French President to decide not to run for a second term.

We recently published an article entitled“Good news for financial institutions seeking to challenge Protective Certificates” which outlined the positive steps taken the High Court to prevent a Debtor from receiving the full benefit of a protective certificate (“PC”) where it would cause irreparable loss to a lending institution.

GENERAL

The Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 Gazetted

The Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 (Amendment Ordinance) was gazetted on 3 June 2016. The Amendment Ordinance aims to improve and modernize Hong Kong’s corporate winding-up regime. The Amendment Ordinance will come into effect on a appropriate date to be published in the Gazette.

Major provisions of the Amendment Ordinance include:

The High Court recently considered Protective Certificates (PC) in the context of Personal Insolvency Arrangements (PIA) in the recent case of Clones Credit Union –v- McManus. A Protective Certificate can be obtained by debtors to prevent enforcement action threatened by creditors. The PC allows such protection for a period of 70 days to facilitate an informal arrangement with creditors.

On March 11, 2016, Judge Christopher Sontchi of the U.S. Bankruptcy Court for the District of Delaware issued an opinion in the Energy Future Holdings bankruptcy that resolved an intercreditor dispute over $90 million in proceeds to be distributed under the plan of reorganization.