Like many other strategically important sectors, there has long been a bespoke insolvency regime for the water sector. New legislation has been brought into effect in January 2024 as a first step to bringing the special administration regime for water (the SAR) up to date with the general UK insolvency regime.
The English Court of Appeal has today overturned the restructuring plan sanction order made by the High Court in April 2023.
The keenly awaited judgment raises some difficult issues for Adler in the context of its restructuring, but more broadly clarifies a number of points in relation to restructuring plans.
How the court uses its discretion to sanction a plan
As the festive season approaches, it is time to take stock of the three 2023 most important decisions of the German Federal Court of Justice (Bundesgerichtshof, BGH) on claw-back issues in insolvency.
As the nights draw in and the new year approaches, we take stock of the state of play for European restructuring and look ahead at potential trends for 2024.
Completion of legal reforms
On 30 October 2023, HM Treasury (HMT) published three documents setting out how the UK government plans to regulate cryptoassets going forward:
The Supreme Court has handed down a judgment which will be greeted with a collective sigh of relief from the insolvency world. In R (on the application of Palmer) v Northern Derbyshire Magistrates Court [2023] UKSC 38, the Supreme Court ruled that an administrator of a company is not an “officer” of that company.
High rates of insolvencies look set to continue as the latest quarterly insolvency statistics have been published for England and Wales. Whilst the statistics show a 2% dip from the second quarter of 2023, the number of insolvencies remains 10% higher than in 2022 and shows a return to pre-pandemic levels for compulsory liquidations and administrations. It is particularly striking that the first two quarters of 2023 represent the highest quarterly insolvencies since Q2 2009.
The Eighth Circuit held that “avoidance actions [e.g., preferences, fraudulent transfers] can be sold as property of the [Chapter 7 debtor’s] estate.” In re Simply Essentials, LLC, 2023 WL 5341506, *1 (8th Cir. Aug. 21, 2023). On a direct appeal from the bankruptcy court, the court affirmed the bankruptcy court’s granting of the trustee’s motions to compromise and sell property under Bankruptcy Code §363(f). A creditor had objected, arguing unsuccessfully that “avoidance actions… are not part of the bankruptcy estate ….” Id.
On July 28, 2023, Judge Michael Kaplan of the Bankruptcy Court for the District of New Jersey issued an opinion granting motions to dismiss LTL Management LLC’s second chapter 11 case, finding that it was filed in bad faith due to a lack of imminent and immediate financial distress. See In re LTL Mgmt., LLC, No. 23-12825 (MBK), 2023 WL 4851759 (Bankr. D.N.J. July 28, 2023). Judge Kaplan’s decision follows the U.S. Court of Appeals for the Third Circuit’s dismissal of LTL’s first chapter 11 bankruptcy case in January 2023.
Over the past year, digital asset investors have become acutely aware of asset custody and counterparty credit risks due to the high-profile bankruptcies of Voyager, Celsius, BlockFi, and FTX. These investors have found that, at times, their assets may be stuck in a bankruptcy proceeding for years. However, these investors—now bankruptcy claim holders—have options for more immediate liquidity.