Could bankruptcy protection be on the horizon for individuals and companies actively involved in the cannabis industry? Potentially yes, following President Biden’s October 6, 2022 request for the Secretary of Health and Human Services to begin the administrative process to review marijuana’s classification as a Schedule I substance under the Controlled Substance Act (“CSA”).
An extension to the Debt Warehousing Scheme has been announced by the Revenue Commissioners.
The Debt Warehousing Scheme (DWS) was introduced during the COVID-19 pandemic to provide support to businesses that were experiencing liquidity and trading difficulties. It has permitted businesses to “warehouse” or defer payment of their tax debts for a specified period.
The corporate insolvency aspects of Directive (EU) 2019/1023 on preventive restructuring were recently implemented in Ireland through the European Union (Preventive Restructuring) Regulations 2022.
Voyager Digital Assets Inc., along with two of its affiliates, filed bankruptcy petitions in the Southern District of New York on July 5, 2022. The filing is significant—it followed months of an extreme downturn in the cryptocurrency sector which led to the collapse of Three Arrows Capital, a Singaporean cryptocurrency hedge fund (that borrowed $350 million and 15,250 Bitcoins from Voyager).
Ordinarily, in civil proceedings a successful party in litigation will be awarded their costs.
This is known as the legal rule or principle that costs follow the event. But a decision of the Court of Appeal in 2021 suggests that this rule may not necessarily apply in examinership proceedings.
Since the Veolia case in the mid 2000s the Irish courts have taken the view that the costs follow the event rule need not necessarily be followed in every instance and that they have a certain discretion to depart from this default rule.
The existence of a personal guarantee over a debt may affect the enforceability of that debt after a company has gone through an examinership process.
A creditor’s ability to enforce a debt subject to a guarantee after a period of examinership is dependent upon that guarantor having been granted a right to vote at the creditors’ meeting approving the scheme of arrangement.
The new formal rescue process for small and medium sized companies, SCARP, is now formally a part of Irish law. The legislation underpinning the new rescue process was officially commenced on Tuesday 7 December 2021.
The High Court recently refused a winding up petition brought by a landlord against a tenant company that had not paid rent on its commercial premises for more than a year.
Lestown Property Limited v The Companies Act 2014 [2021] IEHC 513.
A dispute arose between a landlord, Lestown Property, and a tenant that operated a Leisureplex in Charlestown Shopping Centre. The Leisureplex was only accessible through the lobby of an adjacent cinema. The cinema was leased to a separate entity and was closed during the COVID-19 pandemic.
With Hertz emerging from a bankruptcy with a positive result for shareholders, we are reminded of the interplay between the equity markets and the bankruptcy alternative.
Some firms facing financial challenges during the pandemic were able to avoid a bankruptcy filing altogether because of their ability to raise the necessary funds through an equity offering. Hertz provides an example of a situation where the bankruptcy filing instead of wiping out the equity enhanced value.
The Government has issued a press release stating that it has approved the publication of an upcoming Bill providing the legislative basis for a new insolvency process: the Small Company Administrative Rescue Process (“SCARP”). The announcement follows the publication of the General Scheme of the Bill last month and its indications that it would be prioritising this legislation.