Speed read
The British government has commenced an airline insolvency review, in the wake of recent high profile airline failures such as Monarch and Air Berlin, and on the premise that changes in the industry have outpaced protection regimes.
The review will focus on two main areas: repatriation of stranded passengers and redress for consumers. There is a desire to minimise repatriation costs falling on the public purse and ensure that consumers have clear avenues of redress.
We closed the first quarter of 2018 following a period of intense scrutiny on the restructuring and insolvency profession. The stress in the retail and dining sectors, the increase in CVAs and the various attendances of stakeholders in the profession before Select Committees has been the forerunner to two consultation papers.
On February 16, 2018, the US District Court for the Southern District of Texas issued an opinion that may prove important for non-defaulting parties to trading contracts. In an appeal arising out of the Linn Energy bankruptcy, the district court held that a party seeking to terminate a safe-harbor contract pursuant to section 556 of the Bankruptcy Code is not restricted by any time limitation, and therefore does not waive its safe-harbor rights if it fails to terminate the contract within a certain amount of time.
The Inner House of the Court of Session has found that, where a business had no realistic prospect of continuing in existence, it was not appropriate to assess whether a property was sold at an undervalue by reference to a forced sale valuation.
The Court’s judgment serves as a valuable reminder of some fundamental principles of insolvency law.
The facts
A recent TCC decision has concluded that the contractor insolvency provisions of the JCT form continue to apply after a termination by the contractor for repudiation. This conclusion may give rise to surprising results and potentially allow an employer to claim from the contractor additional amounts incurred in completing the works with a third party even after termination for the employer’s own default and/or repudiation.
In Hellas Telecommunications (Luxembourg) [2017] EWHC 3465 (Ch), the High Court ordered respondent liquidators to disclose the identity of third-party litigation funders and the terms on which funding was provided in order to facilitate an application for security of costs.
Facts
November 2017 saw the first successful pre-packaged bankruptcy of a wind farm operator following the introduction of this procedure to Polish bankruptcy law in January 2016. Thanks to a decision made by the bankruptcy court in Warsaw, the assets of the 6 MW wind farm in Korzęcin can now be taken over by a publicly listed company operating in the renewable energy sector.
On 12 December 2017, creditors in the long running special administration of failed stockbroking firm, MF Global UK Limited (“MF Global”), approved a company voluntary arrangement (“CVA”). This case demonstrates the flexibility of the CVA procedure and the role it can play in complex financial services cases.
What is a CVA?
By the Law 155/2017, that became effective on November 14, 2017, the Italian Parliament required the Government to adopt, within the next 12 months, a comprehensive and organic reform of insolvency proceedings and rules governing a business crisis. The rules governing liens and security interests will also be reformed.
Although the reform will not be converted into binding law before the end of 2018, foreign lawyers and investors may be interested in knowing the guidelines in advance.
According to S&P Global fixed income research, EUR 3.7 trillion of rated European company debt is due to mature between mid-2017 and the end of 2022.This gives rise to anticipation that, in the coming years, the European financial markets will be increasingly driven by refinancing, restructuring and investment in distressed assets. Respondents to the survey “Changing tides: European M&A Outlook 2017” prepared by CMS in cooperation with Mergermarket in September 2017 have also remarked on this trend.