On July 30, 2010 the Italian Parliament passed Law 122/20101 which, among others, improved the restructuring proceedings governed by the Italian Bankruptcy Law2 (“IBL”).
The improvements operate on two fronts of restructuring deals which had proven to be still unclear (and thus risky) despite the recent reform:
On May 21, the bankruptcy trustee for Mt. Gox advised depositors that the bankruptcy case in Tokyo was proceeding. The information contained in the email was limited in scope, guarded and of little use in understanding the trustee’s view of how the bankruptcy ultimately may resolve.
Recently, Japanese bulk-shipping company Daiichi Chuo Kisen Kaisha sought bankruptcy protection in both Tokyo and New York. The company, which features a fleet of 185 vessels used primarily to transport cargo such as limestone, cement and coal overseas, commenced its United States bankruptcy proceedings by filing a Chapter 15 petition in the United States Bankruptcy Court for the Southern District of New York.
Yesterday afternoon in Newark, New Jersey, Judge John K. Sherwood of the U.S. Bankruptcy Court granted Hanjin Shipping Co. Ltd.'s request to recognize its Korean bankruptcy case and to provide U.S. bankruptcy protection to its assets and operations within the United States. However, the U.S. Bankruptcy Court's protection is subject to another hearing on Friday to sort out what arrangements can be made among the various stakeholders.
Arthur C. Clarke famously observed: “Any sufficiently advanced technology is indistinguishable from magic.” Our regulatory, legislative, and judicial systems illustrate this principle whenever new technology exceeds the limits of our existing legal framework and collective legal imagination. Cryptocurrency, such as bitcoin, has proven particularly “magical” in the existing framework of bankruptcy law, which has not yet determined quite what bitcoin is—a currency, an intangible asset, a commodity contract, or something else entirely.
Traditionally in Italy the financial distress of a corporation was treated in a very strict way through proceedings aimed at the dissolution of the company, the sale of its assets and the replace of the directors with commissioners appointed by Public Bodies. Indeed, should the enterprise become insolvent (i.e. not able to regularly pay its debts), it was unavoidably destined to be declared under bankruptcy or be put into extraordinary administration, a special form of insolvency procedure dedicated to the largest companies and aimed at preserving the workforce.
Japanese mobile phone service operator Willcom has filed for bankruptcy protection after failing to reach agreement with creditors on the restructuring of the company’s US $2.3 billion debt load. Filed late last week under Japan’s corporate rehabilitation law, the petition ranks as the largest bankruptcy to affect a Japanese telecom carrier. It is expected to wipe out the investment of the Carlyle Group, the U.S.-based private equity firm that, in 2004, paid US $330 million for a 60% controlling stake in what was then the mobile phone unit of KDDI Corp.
In its bankruptcy filing under Japan's Civil Rehabilitation Law, Mt. Gox claims 6.5 billion yen, or around $64 million, in liabilities and 3.84 billion yen, or around $38 million, in assets.
On April 16, Mt. Gox’s civil rehabilitation proceeding in Tokyo (something similar to a U.S. Chapter 11) was dismissed and the initial stages of a bankruptcy liquidation under Japanese law began. An Interim Administrator (Nobuaki Kobaysahi) has been named until the Japanese court decides whether the liquidation will begin and whether a different Administrator replaces the Interim Administrator. How this situation came to be is an interesting tale.