Last Friday, financial services group Dexia SA announced that it had reached an agreement with the European Commission relating to its restructuring plan. Dexia had previously received approximately €6.4 billion in bailout money from Belgium, France and Luxembourg. Pursuant to the negotiated restructuring plan, Dexia will:
Today, HM Treasury announced the conclusion of discussions with Lloyds Banking Group (Lloyds) and Royal Bank of Scotland Plc (RBS), regarding their participation in the U.K.
The European Commission (EC) yesterday approved the restructuring plan of Northern Rock plc. The plan will split the company into two separate companies. The new Northern Rock plc will consist of a new savings and mortgage bank that will hold and service all customer savings accounts and some existing mortgage accounts.
Today, the FDIC announced the next steps in further developing the government's Legacy Loan Program (LLP), by testing the LLP program's funding mechanism through the sale of a portfolio of residential mortgage loan receivership assets to a limited liability company (LLC) in exchange for an ownership interest in the LLC.
The insolvency of the borrower is a standard event of default in facility agreements. As well as covering the borrower's cash flow insolvency, these clauses also often cover other, earlier signs of distress. Two recent cases have seen lenders try to exploit these outer reaches of their insolvency event of default clauses. Hayley Çapani and Adam Pierce explain why these cases are significant for parties negotiating new deals, and for lenders considering their enforcement options on existing deals.
Negotiations with creditors for rescheduling
On 26 July 2010, the Insolvency Service issued proposals for a new type of short-term restructuring moratorium. The moratorium would be available through a court-based process to companies with a viable business and the general support of creditors. The proposed moratorium could have the potential to encourage more companies to view the UK as an attractive jurisdiction for restructuring.
What are the proposals?
The main features are:
A recent UK High Court decision on the issue of balance sheet insolvency will be of interest in New Zealand, despite the fact that the respective statutory solvency tests differ.
In Kiwi Best Realty Ltd (In Liquidation) v Kashkari, the sole director of a failed real estate business was ordered to pay compensation for breaching his duties under ss 131, 135 and 136 of the Companies Act 1993.
Kiwi Best Realty was liquidated in September 2014, with over $600,000 owing to the IRD. The High Court noted that the company had been balance-sheet insolvent from year end 2012.
In our December 2010 and April 2011 insolvency updates, we reported on the UK High Court and Court of Appeal decisions in BNY Corporate Trustee Services Limited v Eurosail. The issue before both Courts was whether Eurosail was insolvent by virtue of being unable to pay its debts under the balance sheet limb of the solvency test in section 123 of the UK Insolvency Act 1986. The Court of Appeal upheld the High Court decision that Eurosail was solvent, noting that it had not reached the "point of no return".