Among the many financial innovations that came out of the COVID era, non-pro rata uptier transactions as a liability management exercise (“LMEs”) are among the more controversial. While lawsuits challenging non-pro rata uptier transactions are making their way through the courts, two important decisions were recently issued by the Court of Appeals for the Fifth Circuit and the New York Appellate Division.

A recent decision of the Court of Session has found that a Scottish administration can be declared as ancillary to an insolvency process in another jurisdiction. This means that the insolvency proceedings in one jurisdiction are considered as the main insolvency proceedings, while the ancillary proceedings in the other jurisdiction are restricted to dealing with the company's assets located there.

Background

The High Court in England recently issued a stark warning to directors who fail to consider their duties to the company and its creditors when entering financial difficulties.

Background

With the increase in global trade and business, often involving complex corporate structures in multiple jurisdictions, we expect to see a significant increase in cross-border insolvency and restructuring matters in coming years. This is especially the case with rapid advancements in technology and digital change driving “borderless” transactions and investments in every industry.

Introduction

Introduction

Introduction

A March 8 2016 decision of the influential Bankruptcy Court for the Southern District of New York has attracted attention from – and caused concern for – owners of pipelines and other midstream assets, as well as lenders to midstream and upstream lenders across the United States.

Facts

Most due diligence processes in a business acquisition context require a review of material contracts and, in particular, a review of any restrictions on assignment of those contracts.

When a business enters into a long term commercial contract with a customer, the identity of that particular counterparty may influence the terms of the contract. A party deemed more favourable may obtain a better price or better terms.  Unless restricted by enforceable anti-assignment provisions, these favourable contracts can be very valuable in a traditional M&A context.

Of general interest is the appeal in the case of Horton v Henry, on which we reported in our January 2015 update. In Horton, the High Court declined to follow a previous ruling, and decided that a bankrupt could not be compelled to access his pension savings to pay off creditors.