Die fundamentalen Spannungen, die der Ukraine-Krieg in den Energiemärkten verursacht, hinterlassen bereits jetzt tiefe Spuren bei Industrie und Privathaushalten. Vor allem bei besonders energieintensiven Industrien und Betrieben zeichnen sich bereits erste Produktionsdrosselungen, Produktionsstopps und sogar Insolvenzen ab. So haben jüngst Hersteller von energieintensiven Produkten wie Dünger, Kohlensäure und AdBlue die Produktion gedrosselt oder gleich ganz eingestellt. Mit Görtz und Hakle mussten zudem bereits zwei Unternehmen wegen steigender Energiekosten Insolvenz anmelden.

Since 1 October 2022, the Singapore International Commercial Court now has jurisdiction to hear cross-border restructuring and insolvency matters. In addition, foreign lawyers may be appointed to make submissions in restructuring and insolvency proceedings in the SICC. Lawyers may even enter into conditional fee agreements with their clients for selected proceedings provided that certain safeguards are met.

Many years ago, back when mediation is a rarity in bankruptcy disputes, I asked an old-timer this question:

Why is the bankruptcy system a lagging adopter of mediation?”

A Surprising Answer

The old-timer gave this surprising answer:

“At the time of the Bankruptcy Code’s enactment, the bankruptcy judge was viewed as a mediator in the judge’s own court.”

The old-timer added this.  When the Bankruptcy Code was enacted:

You’ve gotta admire the Debtor in In re Deirdre Ventura.

Debtor has been fighting to save a Bed and Breakfast business through bankruptcy: beginning in 2018 with a regular Chapter 11, and then struggling to get into Subchapter V.

Debtor’s is a you-can’t-make-this-stuff-up story of persistence through adversity.

Debtor has survived, for example, an inexplicably-bad appellate opinion refusing to allow Debtor’s Subchapter V election. The appellate opinion declares:

The Supreme Court’s decision in BTI v Sequana & Others represents the most significant ruling on the duties of directors of distressed companies of the past 30 years.

This Supreme Court decision considers the balancing exercise which directors are required to carry out between the respective interests of creditors and shareholders when a company is in financial distress.

This note summarises the key points from the ruling and the practical effect of this decision.

Assignment for benefit of creditors (“ABC”) has existed for centuries under the common law of England and the United States. And the ABC process has worked well under that common law!

ABC Function

ABC has been an effective tool in the toolbox of debtor and creditor remedies for resolving financial stress. Specifically, ABC allows a failing business to shut down with efficiently and credibility:

The interrelationship between an assignment for benefit of creditors (“ABC”) proceeding and an involuntary bankruptcy filing, for the same debtor, is governed by various portions of the Bankruptcy Code.

But that relationship remains ill-defined, nonetheless.

What follows is an attempt to summarize a bankruptcy court opinion dealing with that relationship. And here is two of its main conclusions:

How do you improve the image of company voluntary arrangements? Start by reforming the voting rules.

On June 21, 2022, Congress and the President (i) extend the $7.5 million debt limit for Subchapter V eligibility, and (ii) adjust other Subchapter V rules.[Fn. 1]

One of the adjustments is this:

The U.S. is one of the easiest jurisdictions in the world in which to do business. Regulatory barriers are generally low, establishing a branch or business entity is quick and easy, labor and employment laws are much more employer-friendly than in most other developed economies, and the legal system is well-developed and transparent. However, there are certain barriers to entry and challenges to doing business that should be taken into account before investing or establishing operations in the U.S.