An increasing body of English case law has recognised cryptocurrencies as a form of property giving rise to the possibility of insolvency clawback claims involving cryptoassets.
Recent developments
On 18 January 2022, Hong Kong-listed cruise operator Genting Hong Kong Limited ('Genting HK') filed for provisional liquidation with the Supreme Court of Bermuda after it failed to secure access to liquidity. Genting HK has since gone into liquidation.
Background
The temporary restrictions on the winding up of companies were lifted on 31 March 2022. This means the legal regime governing insolvency has returned to its pre-pandemic approach.
The pre-31 March position
Objective
The new preventive restructuring procedure aims to deal with companies in financial difficulty before serious problems arise. The measures focus on preventing the insolvency of businesses to preserve their viability.
Main characteristics
Background
Under German insolvency law, employees are generally protected from claw-back claims. The payment of wages is considered a "cash transaction" if the employer pays the salary within three months of the work being performed. A “cash transaction” can only be contested in limited circumstances. Where a third party pays the salary, the cash transaction privilege remains if it is not clear to the employee that a third party made the payment (s.142(2) and s.3 InsO).
A recent German Federal Court of Justice ruling shows that this protection has limits.
On 30 March 2022, the English court sanctioned the most recent restructuring plan proposed by Smile Telecoms Holdings Limited (Smile).
Pandemic related restrictions on winding up companies come to an end.
The High Court has sanctioned the Part 26A restructuring plan of E D & F Man Holdings Limited (the Plan) on which Freshfields has advised the E D & F Man Group (the Group). The Plan represents the first full-scale financial restructuring to utilise cross-class cram-down in respect of a financial creditor class and to amend articles of association. This scenario represents the paradigm use case practitioners and commentators envisaged when Part 26A was introduced in 2020.
The Supreme Court recently denied certiorari in Picard v. Citibank, in which the petitioner sought review of a Second Circuit decision on a seemingly obscure point of law: the pleading burden for “good faith” under Section 550 of the Bankruptcy Code. The Second Circuit’s decision is part of, and highlights, a larger, systemic problem in the evolution of bankruptcy law over the last decade—the multiplication of trustee-friendly interpretations of the Bankruptcy Code that, when combined, leave innocent subsequent transferees unfairly vulnerable to meritless clawback suits.
On 16 September 2021, ordinance 2021-1193 implemented the European Directive on preventive restructuring frameworks into French law. The Ordinance applies to proceedings opened from 1 October 2021.
Key features