Recent developments

UNCITRAL recently published its Model Law on Recognition and Enforcement of Insolvency Related Judgments ("MLREIJ"), with a recommendation that nations adopt it into their legislation. MLREIJ is the first model law that specifically provides a framework for recognition and enforcement of insolvency related judgments for nations that adopt it. The adoption of this model law might make cross-border insolvencies more predictable, complete and efficient.

Introduction

More than ten (10) years after the enactment of Brazilian Bankruptcy Law, a uniform understanding by the Brazilian courts of several matters remains unresolved, being the application of substantive consolidation one of the most troubling.

Consolidation (procedural and material)

Globalization is a hot topic these days. It should come as no surprise, then, that the challenges that come with having a global enterprise in financial distress can be complex. The panelists at the INSOL breakout session, Group next (or not): continuing challenges in the treatment of enterprise groups in insolvency, explored what happens when a global organization with businesses in multiple jurisdictions around the world tries to implement a cohesive and coordinated restructuring.

Returns to creditors from litigation against associates of the business are often a lucrative way of getting funds into an administration after a corporate failure. Claims are often made against banks, lawyers and accountants associated with the failure. In some cases, those claims may involve chasing other parties for the proceeds of a fraud. Often these claims provide a greater return than chasing down any remaining assets.

Piggybacking off the case study involving a UK-based company in crisis after an oil spill in Nigeria, panelists Ryan Eagle of Ferrier Hodgson, Marcelo Carpenter of Sergio Bermudes Law Office, David Kelleher of Fortress Investment Group (Australia) Pty Ltd., and Fidelis Oditach of South Square discussed the key decision-making factors of investing in a similarly-situated oil and gas company. Some of the key takeaways applicable to investing in oil and gas companies generally were:

It has become increasingly common for companies needing to restructure to open restructuring / insolvency proceedings in a jurisdiction outside of where their centre of corporate control is located or assets are concentrated. Forum shopping in a restructuring context is becoming more common place, however it also remains highly controversial. The panelists at the INSOL breakout session, A Hitchhikers Guide of Forum Shopping, considered what makes a good forum for restructuring / insolvency, and whether forum shopping is desirable or undesirable.

Some businesses operate in a naturally risky environment where a major crisis event is a real possible consequence of everyday operations. What do you do when something literally blows up?

In the context of the scenario posed for the first day of the conference, this panel considered some of the obligations of the board and the officers of a near insolvent company in managing financial, regulatory, and environmental risks.

Litigation funding can form a useful part of the arsenal of an insolvency practitioner when attempting to maximise the return to creditors. Yet funders can be met with suspicion by creditors and courts alike, depending on the country in which you pursue your litigation.

This break out session sought to highlight key issues for funders and borrowers, and regional differences in how litigation funding is perceived and applied.

Billed as INSOL’s “most popular session”, the plenary session Hot Topics – Avoid Being Burnt! provided a brief overview of developments in the insolvency landscape. The session panel was chaired by Jay A. Carfagnini (Goodmans LLP) with panelists the Honourable Justice Paul Heath of the High Court of New Zealand, Gabriel Moss QC, Gaurav Malhorta (Ernst & Young), and Jason Karas (Lipman Karas).

The panel discussed the following points:

Restructuring & Insolvency
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Restructuring & Insolvency Newsletter
June 2014
In this issue:
Challenges faced by foreign creditors of Suntech
With an eye on the insolvency and restructuring proceedings of Suntech Power Holdings' principal operating subsidiary in China, Kwun Yee Cheung surveys the difficulties confronting foreign creditors in Chinese bankruptcies and restructurings. > Read more
Using English or US proceedings to restructure Asian businesses