Prior to the introduction of the Preventive Restructuring Framework by the StaRUG out-of-court restructurings in Germany other than the restructuring of German law-governed bonds generally required unanimous approval by all affected creditors. Existing in-court procedures were only available in case of insolvency, and entailed substantial court involvement.
High yield bond and leveraged loan issuance for restructurings across the United States and Western and Southern Europe has climbed 65% year-on-year, up from US$29.1 billion for the first nine months of 2019 to US$48 billion over the same period this year.
Recent insolvency law reforms in the UK, Singapore and Australia impact upon the ability of a party to a construction contract to terminate it due to the other party's insolvency.
Background
In a recent decision, the German Federal Supreme Court addressed the applicability of the Business Judgement Rule to insolvency administrators in Germany and rejected the applicability of the rule in the specific case that was argued before it.
Federal Ministry of Justice and Consumer Protection submits draft bill on preventive restructuring
The Federal Government has announced its largest insolvency reform package in over 30 years, which includes a simplified formal debt restructuring process for eligible small businesses.
The centerpiece of the reforms is the adoption of a US-style "debtor in possession" restructuring model, which closely mirrors the recently enacted small business restructuring provisions of subchapter V of the US Bankruptcy Code.
The new UK Corporate Insolvency and Governance Act (CIGA), which took effect in June 2020, ushers in permanent changes to the English insolvency and restructuring landscape as well as temporary, and largely retrospective, measures to help mitigate the economic impact of the COVID-19 pandemic.
The three permanent additions are:
The Insolvency, Restructuring and Dissolution Act 2018 (the "IRDA") came into force on 30 July 2020. The consolidation of all personal and corporate insolvency and debt restructuring legislation into a single statute, along with other legislative changes, seeks to further strengthen Singapore's position as an international debt restructuring hub. This note highlights certain key changes effected by the IRDA that are relevant to loan market participants.
Restrictions on ipso facto clauses
In Re PT MNC Investama TBK [2020] SGHC 149, the Singapore High Court provided guidance as to what is sufficient for a foreign company to establish standing to avail itself to the Singapore restructuring regime. Specifically, the factors expressed in the "substantial connection" test under the IRDA1 are non-exhaustive and courts will consider other factors involving "some permanence" to permit foreign companies to restructure in Singapore.
Establishing a "substantial connection"
Restructurings, especially those involving multiple jurisdictions, are invariably complex matters. This CMS Expert Guide provides an overview of the various restructuring possibilities available in a large number of countries, allowing you to compare how the options are deployed in these jurisdictions.
We intend to update it periodically to reflect important changes as they happen.
If you need more information or have any questions, please do not hesitate to contact us.