On 31 December 2024, the Fifth Circuit Court of Appeals (the "Federal Court of Appeals") ruled that the uptiering transaction conducted by Serta Simmons Bedding LLC ("Serta") did not constitute an "open market purchase", reversing the 2023 summary judgment of the Bankruptcy Court for the Southern District of Texas (the "Texas Bankruptcy Court") that rejected the excluded lenders' claims for breach of the credit agreement. The Federal Court of Appeals also reversed the approval of certain plan provisions relating to an indemnity for the uptiering transaction.
On July 31, 2024, the Supreme Court of Canada provided clarity regarding the treatment of administrative monetary penalties and disgorgement orders resulting from securities violations in Poonian v. British Columbia (Securities Commission).
As we enter 2025, we look back on five important decisions that made the news in 2024. Here is the the first case.
The perspective of a landlord
In brief
A tenant's insolvency hits landlords particularly hard. Existing rental securities (e.g., rent deposit, landlord's lien) cannot always cushion the loss of rent and operating costs. Especially in times of the current energy crisis and rising costs, this issue is becoming increasingly explosive. This is demonstrated by the numerous insolvencies in the fashion retail sector, such as Galeria, Peek & Cloppenburg, KaDeWe and Esprit. High rents are often of the main reasons for insolvency.
The general rule in bankruptcy is that a debtor receives a “fresh start” and is discharged from prior debts, but this is subject to certain exceptions. Subsection 178(1) of the Bankruptcy and Insolvency Act (BIA) sets out eight classes of debts that are not released by an order of discharge including an exception for debts that arise out of fraud. In Poonian v.
In Bolwell & Anor v NWC Finance Pty Ltd & Ors [2024] VSC 30, the Supreme Court of Victoria clarified that a lawyer will not be a "controller" of property within the meaning of section 9 of the Corporations Act 2001 (Cth) (the Act) simply because it was retained to act for a mortgagee exercising their power of sale.
This judgment provides comfort to lawyers as it confirms that they will not assume the obligations of a "controller" under the Act solely by reason of them acting in connection with the sale of real property in an insolvency context.
The England and Wales Court of Appeal recently handed down its first judgment relating to a restructuring plan under Part 26A of the UK Companies Act 2006: Re AGPS Bondco Plc [2024] EWCA Civ 24. Restructuring plans were a 2020 innovation in UK insolvency law, as described in our earlier alert.
On 19 July 2023, the parliament of the Grand Duchy of Luxembourg (Luxembourg) passed bill no. 6539A into law (the New Insolvency Law), marking a significant milestone in the movement to modernise and enhance the competitiveness of Luxembourg’s insolvency framework. The bill has been under discussion for a number of years and aims to curtail the use of bankruptcy as an insolvency solution in favour of the preemptive preservation or reorganisation of financially distressed companies.
After a 10-month inquiry process, on 12 July 2023 the Parliamentary Joint Committee on Corporations and Financial Services (PJC) delivered its final report on the effectiveness of Australia’s corporate insolvency laws.
In this alert, we distil some of the key findings from the almost 400-page report and consider what future law reforms might look like.
A COMPLEX AND INEFFICIENT SYSTEM
简介
最近在Re Guy Kwok-Hung Lam [2023] HKCFA 9一案中，香港终审法院澄清，如果受争议的呈请债务所涉及的协议载有专属司法管辖权条款（「专属条款」），法院应如何处理清盘及破产呈请。
案情
上诉人于2017年与CP Global Inc（「该公司」）及答辩人订立了一份信贷及担保协议（「信贷协议」）。据此，上诉人向该公司提供定期贷款，答辩人就该公司结欠上诉人的所有款项提供个人担保。信贷协议载有专属条款，就该协议所产生或与之有关的所有法律程序赋予纽约法院专属司法管辖权。
于2020年，上诉人认为发生了信贷协议所指的违约事件，故要求答辩人支付信贷协议项下的未偿还本金及利息。答辩人未有按上诉人的要求还款，因此上诉人在香港针对答辩人展开破产法律程序。另一方面，答辩人在纽约提起诉讼，请求法院求宣告并无发生信贷协议下的违约事件。
答辩人反对在香港提出破产呈请的主要理由之一，是专属条款规定上诉人须首先在纽约法院就双方争议进行诉讼，然后才可在香港展开破产程序。