This article is a part one of two series that explores the key issues we have recently seen and the case law arising in Misfeasance and Wrongful Trading claims.

Introduction

What is Wrongful Trading?

Against the backdrop of Hong Kong's emergence from the pandemic and the government's efforts to entice tourists and investors back, there arises a question as to whether the government might consider reviving the corporate rescue bill. Implementing a framework for debt restructuring and negotiations with creditors would help prevent liquidations, which often result in additional job losses and contribute to further economic decline.

Section 544(b)(1) of the Bankruptcy Code enables a trustee to step into the shoes of a creditor and avoid a transfer “of an interest of the debtor in property” that an unsecured creditor could avoid under applicable state law. See 11 U.S.C. § 544(b)(1). Thus, for example, if outside of bankruptcy a creditor could avoid a transaction entered by a debtor as a fraudulent transfer, in bankruptcy, the trustee acquires the power to avoid such a transaction.

What situations call for a Pre-Pack?

Imagine the following scenario: a debtor, in our case a company, is facing severe financial distress. The company, however, still has certain business units that are profitable. In this situation, it may be sensible for the company to sell only these profitable business units. This proactive approach, if implemented quickly, could preserve business value and jobs while minimising disruption to operations and employees.

The questions are: can a Swiss pre-pack achieve this and if so, how?

The High Court has considered the point at which the directors’ duty to consider the interests of creditors arose in the context of a tax mitigation scheme that ultimately failed

The judge found that the duty to consider creditors’ interests had arisen once the directors had become aware that there was a real risk that the scheme would fail and that the company would therefore be unable to pay its debts.

On 17 July 2023, the Hon’ble Supreme Court delivered its judgement in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Private Limited & Ors., 2023 SCC OnLine SC 842 (Raman Ispat). The specific issue of whether Paschimanchal Vidyut Vitran Nigam Ltd. (Appellant) could enforce a security interest created over the assets of Raman Ispat Private Limited (Corporate Debtor) outside of the liquidation proceedings under the Insolvency and Bankruptcy Code, 2016 (Code) was settled in the negative. More importantly, the Hon’ble Supreme Court confined the applicability of State Tax Officer v.

In recent times, the corporate landscape has witnessed a significant shift as Environmental, Social, and Governance (ESG) initiatives gain traction among investor and consumer groups. Companies operating in carbon-centric industries, particularly those involved in fossil fuel extraction, are experiencing challenges in securing new funding. One such company, Nashville-based driller Alpine Summit Energy Partners, has made headlines by seeking bankruptcy protection, citing the lack of funding in the oil and gas industry due to growing ESG and sustainability concerns.

Mac Interiors Limited (the Company), a Northern Ireland-incorporated company, has become the first company incorporated outside the Irish State (and the EU) to have an examiner appointed under the examinership regime provided for in section 509 of the Companies Act 2014 (the 2014 Act).

Bill n°7989 amending the law of September 2, 2011 regulating access to the professions of craftsman, trader, industrialist and certain liberal professions (the “2011 Law”), was adopted yesterday, 20 July 2023, by the Luxembourg Parliament. The dispense with the second vote shall be approved by the State Council in the coming days.

The reform modernizes the right of establishment in the Grand Duchy of Luxembourg in order to create a modern legal framework that will stimulate entrepreneurship.

On July 14, the U.S. Court of Appeals for the Ninth Circuit partially affirmed and partially reversed a district court’s dismissal of an FDCPA suit. The district court reviewed plaintiff’s claims under the FDCPA, which alleged that defendants violated the bankruptcy court’s order discharging his debt and knowingly filed a baseless debt collection lawsuit.