Companies in distress often undertake a sales of assets to alleviate cash flow or debt repayment issues when other lines of credit or source of funds have been exhausted. Such decisions are not taken lightly, especially as the disposal of assets is likely to detrimentally impact the underlying business or forecasts. Ultimately creditors’ demands and survival instincts will result in action being taken however it is often too late and to the detriment of the business.
Introduction
It is common for companies in distress to undertake a sales process of assets to alleviate cash flow or debt repayment issues. Often this course of action is the last resort after all other lines of credit have been exhausted or creditors have stopped providing extended terms of trade. Companies should not take such decisions lightly, especially if the sale will impact the underlying business or forecasts. However, ultimately creditors’ demands and survival instincts result in action being taken (often too late and to the detriment of the company).
Il Tribunale di Milano (29 settembre 2016) conferma l’interpretazione secondo cui il concordato deve essere risolto in conseguenza del solo fatto oggettivo dell’inadempimento che non sia di “scarsa importanza” ai sensi del secondo comma dell’art. 186 l.f.
Il caso
Il Tribunale di Milano (10 novembre 2016) ha disposto l’omologazione ex art. 182-bis l.fall. richiesta da un fondo, ritenuto soggetto di diritto autonomo rispetto alla SGR per mezzo della quale agisce e non solo un patrimonio separato
Il caso
Una SGR ha chiesto l’omologazione di un accordo di ristrutturazione dei debiti per conto di un fondo comune di investimento immobiliare di tipo chiuso, deducendone la situazione di incapienza patrimoniale.
The Court of Pavia (14 October 2016) denies confirmation of a concordato preventivo plan and proposal approved by the creditors, based on the opinion of the Judicial Commissioner that the plan is clearly unsuitable to cure the debtor’s state of financial and economic distress
The case
The Court of Milan (29 September 2016) confirmed that the concordato preventivocan be terminated as a consequence of the mere fact that a “material” breach occurred, as provided by Art. 186 of the Italian Bankruptcy Law.
The case
The Court of Milan (10 November 2016) issued a confirmation order of a debt restructuring agreement pursuant to Art. 182-bis of the Italian Bankruptcy Law on a petition by an investment fund, which was deemed as a legal entity on its own right and not only a separate estate within the SGR which is the legal representative of the fund
The case
Two recent cases provide a timely reminder of the opportunities offered by creditor-funded litigation as a mechanism for bringing funds into what would otherwise be unfunded administrations. Both cases are examples of flexible and “light touch” exercises of judicial discretion which duly recognise the constraints and complex commercial considerations invariably encountered by liquidators in unfunded liquidations.
Approval of litigation funding agreements
Can liquidators disclose legal advice to creditors without waiving privilege? Common interest privilege may assist.
Common interest privilege
Legal professional privilege protects communications between a lawyer and client created for the dominant purpose of seeking or providing legal advice or for current or anticipated litigation.
If advice is disclosed to third parties, there may be a waiver of that privilege.
Insolvency practitioners can benefit from registration errors on the Personal Property Securities Register (PPSR).
Stay alert to any mistakes made by secured parties, as unregistered or invalidly registered interests could vest in the company.
Common errors include: