Re: GUY KWOK-HUNG LAM [2023] HKCFA 9 (date of decision: 4 May 2023)

Introduction

In the recent decision in Re Guy Kwok-Hung Lam, the Hong Kong Court of Final Appeal set out the proper approach to a bankruptcy petition where the parties had agreed to submit to the exclusive jurisdiction of a specified foreign court.

In the latest issue of the Restructuring Department Bulletin, we highlight the Supreme Court’s unanimous decision holding that Section 363(m) of the Bankruptcy Code is not jurisdictional. We also discuss two Bankruptcy Court decisions from the Southern District of New York, one which held that the “knowledge exception” to Section 546(e)’s safe harbor defense was sufficiently pled to survive dismissal, and the other which found that service of a discovery subpoena on the foreign debtor’s founders via Twitter was adequate.

On April 19, 2023, the U.S. Supreme Court unanimously held in MOAC Mall Holdings LLC v. Transform Holdco LLC that Section 363(m) of the Bankruptcy Code is not jurisdictional. The decision requires parties timely to invoke that provision, or else risk forfeiting its protections. The decision also continues the Supreme Court’s trend of interpreting statutes to be non-jurisdictional (and thus waivable or forfeitable) in the absence of a clear congressional statement to the contrary.

Background

In the tenth edition of Going concerns, Stephenson Harwood’s restructuring and insolvency team covers the innovative attempt by a distressed company to shut out low-valued creditors in a scheme of arrangement, the utility of the Singapore recognition of foreign insolvencies regime to assist international liquidations, and the factors which the Singapore Courts will consider when deciding whether to stay a bankruptcy application. It has been a pleasure preparing these articles over the past five years and a big thank you to our readers!

Content

In the current times of financial stress, a borrower seeking to renegotiate or refinance existing financing arrangements may be asked by its lender to enhance or refresh its security package through the grant of a new floating charge.

The question of whether a floating charge can be avoided due to section 245 of the Insolvency Act 1986 ("IA 1986") can arise in such a context.

Void floating charges under section 245 of the IA 1986

On December 5, 2022, in In re Global Cord Blood Corp., 2022 WL 17478530 (Bankr. S.D.N.Y. Dec. 5, 2022) (“Global Cord”), the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) denied recognition of a proceeding pending in the Grand Court of the Cayman Islands (the “Cayman Proceeding” and the court, the “Cayman Court”) because it was more like a corporate governance and fraud remediation effort than a collective proceeding for the purpose of dealing with reorganization or liquidation, as Chapter 15 of the Bankruptcy Code requires.

When an Event of Default is "continuing" is not defined or addressed in the ISDA Master Agreement. Until now it does not appear to have been expressly considered in case law either.

Second Circuit Denies Appeal of Windstream Debtors’ Confirmation Order on Equitable Mootness Grounds

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