On 17 July 2022, Law 216/2022 came into force amending and supplementing Law No. 85/2014 on insolvency prevention and insolvency proceedings and other normative acts.

Law 216/2022 also amended Romanian Companies Law No. 31/1990 (Romanian Companies Law) on the duties of directors if a company is likely to become insolvent. Also, the law brings derogations from the provisions of the Romanian Companies Law on calling deadlines for shareholders’ meetings in those specific cases when a restructuring agreement or approval of the restructuring plan has been confirmed.

Summary

Restructuring Plans (“Plan(s)”) were introduced by the Corporate Insolvency and Governance Act 2020 (“CIGA”) as a rescue tool for companies in financial difficulty to compromise debt and other liabilities owed to secured and unsecured creditors and its members, with the court’s sanction.

The Court of Appeal has held that a settlement agreement between a bank and a group of companies which included releases of the parties’ affiliates prevented the companies from later pursuing claims against their own affiliates. Those affiliates were held to include former administrators appointed by the bank and the administrators’ solicitors: Schofield v Smith [2022] EWCA Civ 824.

The new Companies House Register of Overseas Entities (the “OE Register”) became operational and key parts of the Economic Crime (Transparency and Enforcement) Act (“ECTEA”) came into force on 1 August 2022.

The land registration elements of ECTEA have been deferred and will come into force on 5 September 2022 – this second stage of implementation will with effect from such date have an immediate impact on the registration of property acquisitions and new leases and security being taken over those acquisitions/leases.

Historically, the Hong Kong courts have generally recognised foreign insolvency proceedings commenced in the jurisdiction in which the company is incorporated. This may no longer be the case in Hong Kong following the recent decision of Provisional Liquidator of Global Brands Group Holding Ltd v Computershare Hong Kong Trustees Ltd [2022] HKCFI 1789 (Global Brands).

Historically, the common law has only recognised foreign insolvency proceedings commenced in the jurisdiction in which the company is incorporated. This may no longer be the case in Hong Kong. Going forward, a Hong Kong court will now recognise foreign insolvency proceedings in the jurisdiction of the company’s “centre of main interests” (COMI). Indeed, it will not be sufficient, nor will it be necessary, that the foreign insolvency process is conducted in a company’s place of incorporation.

On 6 June 2022, Mr Justice Harris sanctioned a Hong Kong scheme of arrangement for Rare Earth Magnesium Technology Group (the Company) in re Rare Earth Magnesium Technology Limited [2022] HKFCI 1686 (Rare Earth).

While the M&A pipeline remains strong and the usual acquisition models for listed companies (takeovers and schemes of arrangement) remain active, as talk turns to economic headwinds and rising interest rates, it is worth bearing in mind the third possible pathway to acquire a listed company in a distressed context: the “DOCA takeover”.

IN BRIEF

With inflationary pressures and battered supply chains plaguing business, the debate has resumed over how long struggling firms can put off restructuring

With governments winding down Covid-19 support, supply chains buckling under multiple disruptions, growth stalling and high inflation taking hold, it is unsurprising that businesses are feeling the pressure at 2022's halfway mark. The worsening climate recently prompted JPMorgan Chase chief executive Jamie Dimon to warn investors of an incoming economic "hurricane".

Summary

The Insolvency Service has released its report on CVAs (the “Report”), which was commissioned in response to the significant concerns raised by the commercial property sector in recent years and the legal challenges launched by landlords against a number of CVAs.