Recent Developments

Introduction  

Current turbulent times and the onset of recession are likely to result in an increase in the number of distressed sales and ultimately insolvencies. For those who are fortunate to be in the market as buyers, there may be considerable opportunities but equally there are significant traps for the unwary. This briefing examines some of the key issues which should be considered by prospective buyers of businesses in financial difficulties which are not in formal insolvency proceedings.  

Australian banks have historically relied on formal liquidation, voluntary administration and receivership processes available under the under the Corporations Act 2001 (Cth) and under general law where informal restructurings have failed. There has been little appetite for exploring alternative methods to exit distressed situations by debt trading.

Recent Developments

The banking reform package marks an important step toward the completion of the European post-crisis regulatory reforms

Regulatory capital requirements for prudentially supervised financial services companies across Europe are complex and changing rapidly. To keep track of the regulatory framework in the region, we have brought together the essential features of bank regulation in our EMEA Regulatory Capital wall chart.

PRA consults on capital adequacy. The UK Prudential Regulation Authority proposed changes to the PRA’s Pillar 2 framework for the banking sector, including changes to rules and supervisory statements. The proposed policy is intended to ensure that firms have adequate capital to support the relevant risks in their business and that they have appropriate processes to ensure compliance with the Capital Requirements Regulation and Capital Requirements Directive.

The Reserve Bank has published a consultation paper on insurance solvency standards: the quality of capital and regulatory treatment of financial reinsurance. The paper outlines the attributes the Reserve Bank expects to see in regulatory capital instruments, such as permanence and the ability to absorb losses, and proposes consequential clarifications to the solvency standards to reflect these expectations.

A liquidator has been appointed to supervise the winding up and sale of the assets of Union of Canada Life, one of Canada's oldest life insurance companies, by order of the Ontario Superior Court of Justice.

Union of Canada applied under the Winding Up and Restructuring Act (WURA) for a Winding Up Order and the appointment of Grant Thornton as liquidator to take possession and control of the company and conduct the sale under the protection of a stay of proceedings.

milbank.com 1 Client Alert: Close-out Netting Provisions partially held invalid by German Federal Court of Justice General Administrative Act (Allgemeinverfügung) issued by German Federal Supervisory Authority to avoid Legal Uncertainty and Distortions in Financial Markets EXECUTIVE SUMMARY The German Federal Court of Justice (Bundesgerichtshof, "BGH") ruled on 9 June 2016 that contractual close-out netting provisions which deviate from section 104 of the German Insolvency Code (Insolvenzordnung) are invalid and section 104 of the German Insolvency Code applies in lieu of the invalid contra