Re: Guangdong Overseas Construction Corporation () (in liquidation) (date of decision: 17 May 2023)

Introduction

The High Court recently issued its ruling in the matter of Re Avanti Communications Limited (in administration). It is the first major case since the pivotal 2005 House of Lords decision of Re Spectrum Plus  to examine the characteristics of fixed and floating charges.

Key points

Re: GUY KWOK-HUNG LAM [2023] HKCFA 9 (date of decision: 4 May 2023)

Introduction

In the recent decision in Re Guy Kwok-Hung Lam, the Hong Kong Court of Final Appeal set out the proper approach to a bankruptcy petition where the parties had agreed to submit to the exclusive jurisdiction of a specified foreign court.

Earlier today, Southern District of Texas Bankruptcy Judge David R. Jones (the “Court”) issued an oral ruling on motions for summary judgment regarding the propriety of Serta’s 2020 “uptier” liability management transaction (the “Transaction”). As described below, the Court ruled that the term “open market purchase” in the governing credit agreements was unambiguous, and that the Transaction “very clearly” was an open market purchase.

In the tenth edition of Going concerns, Stephenson Harwood’s restructuring and insolvency team covers the innovative attempt by a distressed company to shut out low-valued creditors in a scheme of arrangement, the utility of the Singapore recognition of foreign insolvencies regime to assist international liquidations, and the factors which the Singapore Courts will consider when deciding whether to stay a bankruptcy application. It has been a pleasure preparing these articles over the past five years and a big thank you to our readers!

Content

In the current times of financial stress, a borrower seeking to renegotiate or refinance existing financing arrangements may be asked by its lender to enhance or refresh its security package through the grant of a new floating charge.

The question of whether a floating charge can be avoided due to section 245 of the Insolvency Act 1986 ("IA 1986") can arise in such a context.

Void floating charges under section 245 of the IA 1986

Restructuring Plans and Chapter 11: A Transatlantic Perspective

Key Takeaways

1

The restructuring plan regime - including, for the first time under English law, cross-class cram down - was introduced in June 2020. Our experience with restructuring plans proposed to-date has been that the English courts have (for the most part) implemented this new tool flexibly, pragmatically and commercially.

2

When an Event of Default is "continuing" is not defined or addressed in the ISDA Master Agreement. Until now it does not appear to have been expressly considered in case law either.

As the tile suggests the state of recognition and assistance jurisprudence & practice in Hong Kong is less than clear. This follows the recent (mostly) conflicting 1st instance decisions of Up Energy and Global Brands. Here are my views about (i) what I believe is settled; (ii) the points of judicial difference; and (iii) what remains unclear.

Settled

BTI 2014 LLC (Appellant) v Sequana SA and Others (Respondents)

Summary

The UK Supreme Court has, for the first time, considered the existence, content and engagement of an obligation on directors to take into account the interests of creditors when a company becomes, or is on the cusp of becoming, insolvent (otherwise known as the “creditor duty”).