NFTs are a hot topic, but their treatment under insolvency law – which will receive more attention due to the recent crisis – has not yet been explored in much detail. This contribution aims to provide a brief overview of the most relevant issues.
NFTs as collateral
Due to their clear structure and organisation, insolvency proceedings are ideally suited for digitalisation processes. It is therefore more than surprising that despite Austria's pioneering role in the digitalisation of the justice system with its Justice 3.0 project, there has been no significant development in the expansion of digitalisation in insolvency proceedings since the early 2000s. The situation is different in Croatia, however, where the new Insolvency Act came into force in 2015 and was used as an opportunity to open the path towards digitisation.
The United Kingdom Supreme Court has just released an important insolvency judgment in BTI 2014 LLC v Sequana SA [2022] UKSC 25 (Sequana), which concerns when and the extent to which directors of a company must consider the interests of creditors.
The United Kingdom Supreme Court has just released an important insolvency judgment in BTI 2014 LLC v Sequana SA [2022] UKSC 25 (Sequana), which concerns when and the extent to which directors of a company must consider the interests of creditors.
Since our last newsletter, Russia's war in Ukraine rumbles on, domestic inflation hits new highs and there are signs of an increase in activity in the insolvency market. Russians unlawful assault on Ukraine continues unabated, as we enter the European summer months, and the fourth month of the invasion. Besides the utter devastation inflicted on the people and infrastructure of Ukraine, the war is having a significant impact on both global food and oil prices.
The Supreme Court confirmed parties' freedom to contractually modify any of the prerequisites for set-off under Bulgarian law, thus permitting various quasi-security arrangements in commercial and financial contracts that creditors may avail themselves of.
Prerequisites for statutory set-off in Bulgaria
The Hungarian government issued a decree that amends certain provisions of the bank's liquidation proceedings. The decree entered into force on 15 April 2022 and affects the solvent liquidation of Sberbank Hungary, a subsidiary of Sberbank Europe AG, the Hungarian member of the Russian Sberbank group.
We open the year with several events of major significance. The unlawful invasion of Ukraine by Russia is justifiably dominating the news cycle, with harrowing images of the impact of Russia's indiscriminate military bombardment on Ukrainian cities and towns. The invasion will have a substantial impact on the global economy. The conflict is also highly likely to have implications for our own domestic markets despite the geographical distance between us. Local sharemarkets have been volatile and oil prices have spiked in the last week.
So far, the Bulgarian economy has encountered various COVID-19-related effects, but a surge in insolvencies is not yet one of them. Although the Bulgarian state was slow in implementing measures to help companies affected by the pandemic – which measures turned out to be insufficient – there has been no visible increase in bankruptcy proceedings since 2020.
There has been a longstanding need in Hungary for a legal instrument to rescue distressed companies. The only legal solution so far for such companies was the unpopular and inflexible bankruptcy procedure, which is also risky for the debtor, as failure will automatically turn into a liquidation proceeding and the company will cease to exist. Bankruptcy, with its formalistic procedures and limited involvement of creditors in the decision-making, has done more harm than good. It also usually stigmatised the debtor.