Introduction This briefing complements our other publications on corporate restructuring and the sale or purchase of distressed assets.  

What are the options for companies in financial difficulty in the PRC?  

Summary  

The international banking crisis has hit hard. German banks and companies are also affected. This briefing provides an insight on questions that are typically raised when persons are exposed to insolvency situations which involve proceedings initiated in Germany or abroad but have a connection to Germany in certain aspects.  

When does German Insolvency Law apply?  

Introduction  

Current turbulent times and the onset of recession are likely to result in an increase in the number of distressed sales and ultimately insolvencies. For those who are fortunate to be in the market as buyers, there may be considerable opportunities but equally there are significant traps for the unwary. This briefing examines some of the key issues which should be considered by prospective buyers of businesses in financial difficulties which are not in formal insolvency proceedings.  

What is a debt restructuring?

The aim of any restructuring (also sometimes called a workout) is to rearrange the debtor’s financial commitments so that it is able to service its restructured debts and survive as a going concern. It is important to note that this is a consensual process and is not undertaken under the supervision of a court or other supervisory body - therefore, it is important the all creditors are involved.  

If it’s voluntary, how does it work?

As we have recently noted, the federal banking agencies have worked together to expand the pool of investors eligible to bid to acquire failing depository institutions. See our 21st Century Money, Banking & Commerce Alert entitled “OCC Approves Shelf Charter for National Banks to Encourage New Investment” (Nov. 25, 2008). The Federal Deposit Insurance Corporation (“FDIC”) has recently modified the receivership process in less obvious ways that also may have important ramifications for investors. 

Introduction

Following the administration proceedings recently instituted against a number of UK entities (Affected Companies), many counterparties (Counterparties) may wish to terminate transactions under the TBMA/ISMA Global Master Repurchase Agreement (GMRA) entered into between them and Affected Companies.

On 15 September 2008, the FSA published a statement concerning Lehman Brothers Holding Inc.

In the statement the FSA states that Lehman Brothers Holding Inc, a US investment bank, announced that it intends to file a petition under chapter 11 of the US Bankruptcy Code.

Introduction

On 25 July 2008, HM Treasury published a Consultation Paper entitled Modernising the insolvency protections for the operation of financial markets - proposals to reform Part 7 of the 1989 Companies Act (the Consultation Paper).

Proposals

On July 28, 2008, the Federal Deposit Insurance Corporation (“FDIC”) published for comment a proposed rule that would require certain troubled depository institutions to maintain records of their qualified financial contracts (“QFCs”) in order to provide the FDIC with basic information when the agency is appointed as receiver. 73 Fed. Reg. 43635. Comments on the proposed rule must be received by the FDIC by September 26, 2008.

Gleave and others v The Board of the Pension Protection Fund [2008] EWHC 1099 (Ch)

The High Court ruled that calculations of employer debt by scheme actuaries cannot be challenged by insolvency practitioners unless there is evidence of fraud or error.