On August 17, 2023, China Evergrande Group, one of China’s largest real estate developers, and its affiliates filed chapter 15 petitions in the US Bankruptcy Court for the Southern District of New York in Manhattan seeking recognition of foreign restructuring proceedings in the High Court of Hong Kong and in the High Court of the Eastern Caribbean Supreme Court in the British Virgin Islands.

Deciding the parameters of directors' personal liability for actions, or omissions, when a company continues to trade while it is or near insolvent requires a balance to be struck between allowing directors latitude to try to rescue the company and protecting the company's creditors.

From 1 September 2023, judicial reorganisation proceedings by way of an amicable agreement as well as those with a view to a collective plan will both have a private variant. This will help avoid negative publicity and allowing the debtor to prepare its restructuring in all quietness.

As a reminder, a company confronted with financial difficulties threatening its continuity may file for judicial reorganisation proceedings to get protection against enforcement actions and bankruptcy filings by its creditors.

From 1 September 2023, the restructuring expert will make their first appearance in Belgian restructuring law. This new court-appointed practitioner can be assigned a variety of tasks, ranging from assisting the debtor in negotiations with creditors to supervising the restructuring process and compliance with creditor information obligations.

From 1 September 2023, Belgian insolvency law will provide a new discrete preparatory procedure before bankruptcy. It’s aimed at facilitating a value-maximising transfer of assets or activities as a going concern in the interest of creditors and employees.

From 1 September 2023, the Belgian reorganisation procedure by way of a collective plan will be radically changed for large companies. It introduces the obligation to group creditors (and shareholders) into “classes” for the purpose of voting on a restructuring plan.

The Belgian Act of 7 June 2023 transposing EU Restructuring Directive (2019/1023) introduces new rules specifically aimed at large companies filing for a judicial reorganisation through a collective plan (similar to the US Chapter 11 or UK Restructuring Plan procedure).

Key Takeaways

In welcome news for insolvency practitioners, the Supreme Court has limited the circumstances in which a dissatisfied bankrupt will have standing to challenge a trustee in bankruptcy's decisions or actions under section 303(1) of the Insolvency Act 1986 (Act), to those where there is likely to be a surplus in the bankruptcy estate (subject to only very limited exceptions). The Supreme Court acknowledged that, while this decision is about bankruptcy, the reasoning will also apply to challenges to liquidators' decisions under section 168(5) of the Act.

In welcome news for insolvency practitioners, the Supreme Court has limited the circumstances in which a dissatisfied bankrupt will have standing to challenge a trustee in bankruptcy's decisions or actions under section 303(1) of the Insolvency Act 1986 (Act), to those where there is likely to be a surplus in the bankruptcy estate (subject to only very limited exceptions). The Supreme Court acknowledged that, while this decision is about bankruptcy, the reasoning will also apply to challenges to liquidators' decisions under section 168(5) of the Act.

The High Court has considered the point at which the directors’ duty to consider the interests of creditors arose in the context of a tax mitigation scheme that ultimately failed

The judge found that the duty to consider creditors’ interests had arisen once the directors had become aware that there was a real risk that the scheme would fail and that the company would therefore be unable to pay its debts.

Yesterday, the Supreme Court (SC) handed down judgment in Philipp v Barclays Bank UK Plc [2023] UKSC 25. In summary, the SC found that banks do not owe a duty to refrain from executing customers’ direct payment instructions where there may be an attempt to defraud the customer.