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.

On March 25, 2022, the Alberta Court of Appeal issued its decision in PricewaterhouseCoopers Inc v Perpetual Energy Inc, 2022 ABCA 111. Briefly, the Court held that abandonment and reclamation obligations (ARO) of oil and gas assets operate to depress the value of those assets for the purposes of fraudulent preferences legislation, notwithstanding that they are not provable claims in bankruptcy. The Court also held that serial summary dismissal applications on different grounds are an abuse of process.

The corporate attribution doctrine concerns the attribution of the actions of a corporation’s directing mind to the corporation itself. On March 10, 2022, in Ernst & Young Inc. v. Aquino [Aquino], the Court of Appeal released what it described as a decision of first impression in which the Court considered the doctrine in the bankruptcy and insolvency context.

Regulatory obligations often conflict with bankruptcy law. It has long been considered a necessary benefit that people get a fresh start through bankruptcy. The law provides for exceptions to this principle, on the basis of equally important public policy grounds that certain penalties and obligations should not be so easily avoided.

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.

As of 17 July 2021 the EU restructuring directive¹ was implemented in Austria by the new Austrian Restructuring Code (ReC). The ReC allows debtors to enter formal restructuring proceedings before actually becoming insolvent. To minimise the disruption to debtor's operations, the proceedings are not public, a ban on enforcement of collateral can be implemented and the rights of counterparts to amend or terminate existing contracts are significantly curtailed.

The Czech Ministry of Justice recently published a bill on preventive restructurings (the "Bill") implementing the directive on preventive restructuring frameworks which will introduce a brand-new legal tool preventing the insolvency of viable enterprises in temporary financial difficulties.

The Bill is now heading to the legislative process and should become effective from July 2022. Although it may still undergo some changes, it is already obvious that it will revolutionise Czech insolvency law.

Editorial | Restructuring Directive