Amid ongoing economic uncertainty, businesses face growing – and sometimes insurmountable – challenges to remain viable, leading to a marked increase in accelerated or ‘distressed’ sales.

Distressed M&A describes a sale of shares or assets where the business is in financial distress. This includes, for example, companies that are undergoing restructuring or facing insolvency. The sale can be led by the company itself or an officeholder if the company has entered into a formal insolvency process.

On June 27, 2023, the Official Committee of Unsecured Creditors (the “Committee”) in the BlockFi Chapter 11 bankruptcy reorganization case filed an Objection to the company’s Plan and essentially requested that the company be liquidated. The Official Committee is made up largely of 600,000 individual customers of BlockFi.

BlockFi is a wealth management and trading firm for cryptocurrency holders that first commenced operations in 2017. In July 2021, we wrote about BlockFi’s bumpy road to going public, even though its valuation had just hit $5 billion.

In brief

In Avanti Communications Ltd [2023] EWHC 940 (Ch), the English court revisited the vexed issue of fixed and floating charges. Notably, it is the first significant case since the landmark decision in Re Spectrum Plus Ltd [2005] UKHL 41 to do so.

The distinction between fixed and floating charges is economically important and affects the recoveries a secured creditor may expect to receive in an insolvent liquidation of the security provider.

As the economic outlook remains uncertain, businesses of all sizes and their boards are experiencing mounting pressure from various sources. In particular, directors of companies in financial difficulty face a number of challenges. Primarily, they must decide what they can do to keep the company in business without running the risk of committing an offence or incurring personal liability, and at what stage they must stop trading.

This article outlines some key issues and strategies that directors should consider when times are tough.

Lehman Bros. Int'l (Europe) (In Admin.) v. AG Fin. Prod., Inc., No. 653284/2011 (Sup. Ct. N.Y. County May 17, 2023) [click for opinion]

In brief 

The Court of Final Appeal (CFA), in its recent judgment in Re Guy Kwok-Hung Lam [2023] HKCFA 9 (link to judgment), has ruled on the proper approach towards a bankruptcy petition where the underlying dispute of the petition debt is subject to an exclusive jurisdiction clause (EJC).

In brief

In brief

The New Criminal Code became the first piece of legislation passed into Law in 2023 and was promulgated on 2 January as Law No. 1 of 2023.

With its Draft Directive, the EU Commission is paving the way for a harmonization of material insolvency law within the European Union. This newsletter is intended to provide an initial overview of which areas are to be harmonized under the Draft Directive and especially what changes and impact the introduction of "pre-pack proceedings" would cause on the existing German insolvency law.

1. Key content of the EU Commission's proposal for a directive on the harmonisation of certain aspects of insolvency law