Japan Inc has embarked upon the overdue process of unbundling its conglomerate structures. Businesses that are being put up for sale include distressed oversees operations, particularly in the automotive sector. Managing the businesses while they are in distress, preparing them for sale, and eventually selling them, comes with a variety of legal and practical complications. The legal landscape will vary by jurisdiction, but the following aspects generally need to be considered in some shape or form regardless of the applicable law.

Uncertain times have a knock-on effect on all aspects of life including business. The pandemic, Brexit, ever-rising inflation and now an energy crisis against the backdrop of war in Europe have made many businesses face financial difficulty.

Suppliers and customers alike are facing extraordinary pressures, and this can affect key supply contracts. This has meant the importance of insolvency law and practice in this area has risen considerably.

What happens if a customer becomes insolvent?

Given the recent media coverage and growing concerns among investors over the risks associated with a bankruptcy filing of a cryptocurrency exchange, it feels timely to highlight some issues that arose in the Chapter 11 cases of Cred Inc. and certain of its affiliates (collectively, “Cred”).

The Indian Supreme Court holds in Ebix[1] that once a Resolution Plan has been approved by the Committee of Creditors (CoC),it cannot be withdrawn by the Successful Resolution Applicant(“SRA”). It comes to this conclusion by holding that principle applicable under common law or the contract act, viz frustration or force majeure, are not available to the SRA under the Insolvency and Bankruptcy Code (“Code”) regime.

The challenges faced by the construction industry are continuing to grow and insiders wonder when the storm is going to hit. For some, like Probuild, it already has. Rising inflation and the increasing cost of debt, labour shortages, supply chain delays and escalating cost of freight and materials are putting the industry under enormous pressure. Simultaneously Governments have invested heavily in building and construction to maintain growth in the economy.

HERBERT SMITH FREEHILLS

Pension Disputes Bulletin

Welcome to the latest edition of our regular pension disputes bulletin. In these bulletins we report on key cases, Ombudsman decisions and regulatory activity and we highlight emerging risks for pension schemes, providers, sponsors, administrators and other service providers.

In a hurry? In a hurry? Read the `Risk warning', `Takeaways' and `Comment' boxes to find out the key risks, points to note and to read our observations on each case/ development.

MAY 2022

The appointment of voluntary administrators to Probuild in March 2022 sent shockwaves through the construction industry. External administrations of other recognised brands such as Grocon, ABD Group, Privium and Condev have also caught media attention. Overall, external administrations in the construction industry have been increasing, notwithstanding that the insolvency numbers generally have declined to historical 20-year lows. The insolvency of each builder impacts numerous parties including developers, principals, sub-contractors, suppliers, consultants and employees.

In In re Squirrels Rsch. Labs, LLC, No. 21-61491, 2022 WL 1310173, at *1 (Bankr. N.D. Ohio Apr. 29, 2022), the United States Bankruptcy Court for the Northern District of Ohio recently addressed whether post-sale of the debtors’ assets, a creditor could conduct discovery to investigate the extent of a secured creditor’s liens in order to amend the distribution of the sale proceeds. Under the facts of this case, the bankruptcy court denied the creditor’s request.

Introduction

The National Security Investment Act 2021 (the “Act”) came into effect on 4 January 2022 and introduced a new UK investment screening regime focused on national security risks (the “NSI Regime”). It is similar to the Committee on Foreign Investment in the United States (“CFIUS”) regime. The Act is wide reaching; it provides the UK government with the power to review and intervene in transactions that may pose a UK national security risk due to a transfer of control of sensitive entities or assets.