In a further development to cross-border insolvency cooperation between Hong Kong and Mainland China, the Hong Kong Court has issued a letter of request to a Mainland Court requesting recognition and assistance of Hong Kong liquidators appointed over a Cayman company, under the mutual recognition arrangement introduced on 14 May 2021 (the “Arrangement“, see our previous update here
The Court of Appeal has confirmed that the High Court was right to restrict the assistance an English court could give to a Russian trustee in bankruptcy at common law, refusing to allow immoveable property situated in England to be administered by the trustee as part of the foreign bankruptcy proceedings: Kireeva v Bedzhamov [2022] EWCA Civ 35.
On 23 February 2022, WBHO Australia Pty Ltd and 17 other companies in the Probuild group (Probuild, or the Group), entered voluntary administration in Australia. Probuild is one of the largest construction groups in Australia, working on many large office, residential and resources related construction projects across the country.
In its recent decision in Morton as Liquidator of MJ Woodman Electrical Contractors Pty Ltd v Metal Manufacturers Pty Limited [2021] FCAFC 228, the Full Court of the Federal Court of Australia (the Court) held that statutory set-off, under section 553C(1) of the Corporations Act 2001 (Cth) (theAct), is not available to a creditor in respect of a liquidator’s claim against that creditor for the recovery of an unfair preference under s 588FA of the Act.
In Re Grand Peace Group Holdings Limited [2021] HKCFI 2361, the Hong Kong Court refused to exercise its discretionary jurisdiction to wind up an offshore holding company due to difficulties in the recognition of Hong Kong liquidators in the BVI.
Background
The automatic stay is a procedural tool in a bankruptcy case that effectively halts efforts by creditors to collect on a debtor’s outstanding obligations. As discussed in more detail in our prior post, immediately upon the filing of a bankruptcy petition, a “bankruptcy estate” is created, which includes virtually all assets of the debtor.
Federal Rule of Bankruptcy Rule 3002.1 went into effect December 1, 2011. It was implemented to address a perceived problem in “cure and maintain” Chapter 13 cases (cases in which the debtor cures any pre-petition arrearage and maintains monthly post-petition payments on long-term loans) – that mortgage creditors were not providing the debtor with notice of post-petition payment changes and fees assessed post-petition, causing debtors to often exit a successful Chapter 13 with a delinquent loan.
Many creditors have been warned of the need to halt collection efforts once they are put on notice that a debtor has filed for bankruptcy. However, the “why” behind this warning, mainly the automatic stay, is often misunderstood or disregarded. Since violations of the automatic stay can have serious ramifications, it is crucial that creditors know what the automatic stay is, what it protects, and how to get relief from the stay so that the creditor can proceed with collection efforts.
What Is the Automatic Stay? What Does It Protect?
The Second Circuit’s August 2021 decision in In re Gravel, 6 F. 4th 503, has already received considerable attention and generated much debate over the last few months.
A few changes to the Federal Rules of Bankruptcy Procedure became effective on December 1, 2021. The most noteworthy change relates to Bankruptcy Rule 9036, which addresses notice and service by electronic transmission.