Retired U.S. Bankruptcy Judge Robert E. Gerber once observed that “issues as to the interplay between environmental law and bankruptcy are among the thorniest on the litigation map.” Difficulties navigating this interplay largely stem from the inherent conflict between the goals of bankruptcy and environmental laws, with the former aimed at providing debtors with a fresh start, while the latter cast a broad net to hold parties (even some innocent parties) responsible for past harm to the environment.

Historically, the Hong Kong courts have generally recognised foreign insolvency proceedings commenced in the jurisdiction in which the company is incorporated. This may no longer be the case in Hong Kong following the recent decision of Provisional Liquidator of Global Brands Group Holding Ltd v Computershare Hong Kong Trustees Ltd [2022] HKCFI 1789 (Global Brands).

Historically, the common law has only recognised foreign insolvency proceedings commenced in the jurisdiction in which the company is incorporated. This may no longer be the case in Hong Kong. Going forward, a Hong Kong court will now recognise foreign insolvency proceedings in the jurisdiction of the company’s “centre of main interests” (COMI). Indeed, it will not be sufficient, nor will it be necessary, that the foreign insolvency process is conducted in a company’s place of incorporation.

On 6 June 2022, Mr Justice Harris sanctioned a Hong Kong scheme of arrangement for Rare Earth Magnesium Technology Group (the Company) in re Rare Earth Magnesium Technology Limited [2022] HKFCI 1686 (Rare Earth).

While the M&A pipeline remains strong and the usual acquisition models for listed companies (takeovers and schemes of arrangement) remain active, as talk turns to economic headwinds and rising interest rates, it is worth bearing in mind the third possible pathway to acquire a listed company in a distressed context: the “DOCA takeover”.

IN BRIEF

With inflationary pressures and battered supply chains plaguing business, the debate has resumed over how long struggling firms can put off restructuring

With governments winding down Covid-19 support, supply chains buckling under multiple disruptions, growth stalling and high inflation taking hold, it is unsurprising that businesses are feeling the pressure at 2022's halfway mark. The worsening climate recently prompted JPMorgan Chase chief executive Jamie Dimon to warn investors of an incoming economic "hurricane".

A foreign (non-U.S.) company can be dragged unwillingly into a U.S. bankruptcy case if the bankruptcy court has “personal jurisdiction” over the company.

A foreign (non-U.S.) company can be dragged unwillingly into a U.S. bankruptcy case if the bankruptcy court has “personal jurisdiction” over the company.

Introduction

HERBERT SMITH FREEHILLS

Pension Disputes Bulletin

Welcome to the latest edition of our regular pension disputes bulletin. In these bulletins we report on key cases, Ombudsman decisions and regulatory activity and we highlight emerging risks for pension schemes, providers, sponsors, administrators and other service providers.

In a hurry? In a hurry? Read the `Risk warning', `Takeaways' and `Comment' boxes to find out the key risks, points to note and to read our observations on each case/ development.

MAY 2022