One could almost be forgiven for thinking that nowadays delayed second creditors' meetings are just par for the course.
Applications to extend the time for the second meeting - often for months - have become quite routine, and are rarely (if ever) refused.
Some observers might thus wonder if we are losing sight of one of the objectives of the VA procedure - that it "should be expeditious".[1]
Although the Australian voluntary administration regime served as the model for the UK administration system, one notable difference has emerged between the two systems: pre-packs.
Pre-packs – the use of a statutory insolvency regime to implement a pre-agreed debt / corporate restructuring – have not really taken off in Australia. In the UK, of course, they form a significant proportion of all administrations.
The statutory exemption can be refreshed each time a person signs a new contract, even if he/she continues to hold the same position.
Receivers of a failed company have been unable to convince the Federal Court that statutory restrictions on termination payments reduced the payout entitlement of a senior executive (White v Norman; In the Matter of Forest Enterprises Australia Limited (Receivers and Managers Appointed) (in Administration) [2012] FCA 33).
Background
This discussion is being provided to our clients and friends to analyze the challenges presented in this difficult economic environment when an FDICinsured institution experiences a capital difficulty and is directed by the Banking Regulators1 to restore the institution's capital adequacy.2 In the past four years, the FDIC has closed approximately 400 insured institutions—as of January 1, 2012, the FDIC has indicated that there were over 800 banks on its "problem bank list." The difficulties experienced by many of these institutions are summarized in this analysis—
Australia needs to rein in ipso facto clauses in order to develop a turnaround culture for financially troubled companies.
Within hours of Kodak's move into Chapter 11 bankruptcy, the internet was alive with bad jokes:
"Kodak's business didn't develop the way they expected."
"Kodak was overexposed to the GFC."
"Kodak's Chapter 11 hearing was held in camera."
Australian businesses and liquidators might be forgiven for thinking that the bigger joke is Australia's lack of a Chapter 11 turnaround culture.
Numerous municipalities in California and elsewhere are struggling financially. Indeed, Harrisburg, Pennsylvania and Central Falls, Rhode Island have both recently filed for Chapter 9 protection. State governments may have neither the economic reserves nor the political will to bail out troubled cities and counties. These circumstances have raised the focus on Chapter 9 as a tool for reorganizing municipality debt obligations and has deepened the debate between states and their municipalities about the best strategies for addressing a fiscal crisis.
Recent remarks by the English High Court in the insolvency case Green (Liquidator of Stealth Construction Limited) -v- Ireland [2011] EWHC 1305 (Ch) suggest that in some circumstances, and at least in the context of fast-moving real property transactions, an exchange of emails may well satisfy the requisite formalities for creation of a binding and enforceable contract.
The UK Supreme Court, which is the UK's highest court, has handed down its long-awaited decision in Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc [2011] UKSC 38, in which the Court considered the validity and enforceability of so-called "flip" clauses under English bankruptcy law.
The Australian unit trust industry recently experienced financial difficulties. The formal legal process of handling those difficulties has revealed gaps in the Australian regulatory map.
This article highlights some of those problems and the Government’s response to them.
Background
Few now remember that Chapter 5C of the Corporations Act can trace its origins to the afternoon of 23 July 1991. For the past year, the unlisted property trust industry had been in meltdown. The value of the assets held by the industry had fallen over 20%. Investors were scrambling to get out, and collapses seemed imminent.