On August 26, 2014, in the case In re MPM Silicones, LLC, Case No. 14-22503 (Bankr. S.D.N.Y.) (“Momentive”), the United States Bankruptcy Court for the Southern District of New York held that secured creditors could be “crammed down” in a chapter 11 plan with replacement notes bearing interest at substantially below market rates.

Foreign sovereigns have long assumed that the Foreign Sovereign Immunities Act (FSIA) provides them with substantial protection against litigants in United States courts. Although the immunity afforded by the FSIA has never been absolute, two recent developments in the Supreme Court of the United States – both involving the Republic of Argentina – have expanded plaintiffs’ ability to locate sovereign assets and force satisfaction of a judgment, notwithstanding the seemingly broad protections of the FSIA.

The rulings are important for sovereign investors for a number of reasons:

Schroder Exempt Property Unit Trust and another v. Birmingham City Council [2014] EWHC 2207

Summary

A landlord is liable for business rates where a tenant's lease is disclaimed, even if the landlord does not take possession of the property following a disclaimer.

Background

The Restructuring, Insolvency and Bankruptcy Group considers the English law position.

Wrongful Trading

The Restructuring, Insolvency and Bankruptcy Group considers the legal, commercial and practical issues.

Do a deal quickly!

Often it is in the interests of both buyer and seller to negotiate and complete a deal as soon as possible to preserve value in the business before goodwill is tainted with any stigma of insolvency or key employees, suppliers or customers leave the business.

Buy the business not the shares

MiFID 2 package published in OJEU: The text of the recast Markets in Financial Instruments Directive (MiFID 2) and its related Regulation (MiFIR) were published in OJEU on 12 June and will come into force on the 20th day following that of their publication. Member States have to transpose MiFID 2 by 3 July 2016 and both it and MiFIR will apply from 3 January 2017.

On June 9, 2014, the Supreme Court issued a decision in Executive Benefits Insurance Agency v. Arkison, a case that tested the extent of the jurisdiction of bankruptcy court judges to decide fraudulent transfer and certain other claims against non-debtors. Ropes & Gray LLP represented the petitioner in obtaining certiorari and in the Supreme Court proceedings.

KEY POINTS

CLLS responds on bail-in: CLLS' financial and insolvency law committees have responded to Treasury's consultation on the implementation of bail-in powers. CLLS feels it would have been better for the Financial Services (Banking Reform) Act 2013 and relevant secondary legislation to have been promulgated only once the EU Bank Recovery and Resolution Directive (BRRD) was final. However, it appears the UK Government does not want to wait until January 2016 to apply bail-in requirements and so is proceeding ahead of the EU timetable.

What you need to know

The entry of the Cape Town Convention into force under Canadian law is a positive step, but has led to a legislative “black hole” in the protection provided to certain aviation creditors, bringing with it considerable uncertainty and potentially expensive ramifications.

The Cape Town Convention in Canada