In a unanimous 25 February panel decision, the Second Circuit Court of Appeals held that the trustee liquidating Bernard L. Madoff’s investment firm can claw back billions in Ponzi scheme proceeds from investors who received the proceeds indirectly through non-U.S. “feeder funds” (funds that aggregate investor capital to invest in funds such as Madoff’s).
Nearly a year ago, the Italian Parliament passed Law 155/2017 giving the Government twelve months to adopt a root and branch reform of the rules governing business distress and insolvency procedures, taking into account European legislation (EU Regulation 2015/848, Commission Recommendation 2014/135) and the principles of the United Nations Commission on International Trade Law.
U.S. Bankruptcy Judge Martin Glenn recently decided that a fully-negotiated agreement would not be enforced in the absence of required signatures. The agreement contemplated a settlement between the General Motors bankruptcy trust and car purchasers and accident victims of General Motors cars following an alleged vehicle defect; both parties fully and unambiguously agreed to be bound by the terms of the agreement.
What can the UK and South Africa learn from each other by comparing the business rescue regime with administration?
South Africa’s relatively recent business rescue regime (introduced in 2011) has exploded into a popular process for “affected persons” facing a company in financial distress. It shares some aspects with the administration procedure in England and Wales (UK). Lessons can be drawn from both the similarities and the differences between the two procedures that may benefit restructuring and insolvency practitioners both in the UK and South Africa.
There has been considerable controversy about the extent of the powers, and the extent of obligations of a business rescue practitioner in relation to a cession of book debts by the company in rescue.
This is an important issue in business rescue because most financially distressed companies have an overdraft facility with a bank which is secured by a cession of debtors. Many practitioners want or need to use the overdraft facility as working capital.
Cession (generally)
Much time is spent by MLAs and Sponsors negotiating the list of unanimous lender decisions in a leveraged finance syndicated facilities agreement. The Sponsor will be concerned that its portfolio company should not find itself "held to ransom" on a waiver request by a dissenting minority lender. On the other hand, lenders require certain fundamental transaction terms to be entrenched so that key decisions cannot be taken without them. Commonly, changes which would increase the facilities, reduce the margin or extend the final repayment date will require the consent of all lenders.
On 17 July 2014, the regulation creating the European Account Preservation Order ("EAPO") came into force. This regulation will serve as an alternative to domestic remedies and relates to the freezing of bank accounts across participating EU Member States. The EAPO Regulation will be applicable from 18 January 2017. It will automatically apply to all Member States except the UK and Denmark which have opted out of the EAPO; therefore, it will not apply to assets located in those countries.
What's New?
London & Westcountry Estates Limited ("LWE") went into administration in March 2012. The directors of LWE claimed that its bankers had mis-sold an interest rate swap product to them, and that they were, as a result, entitled to compensation. As LWE was in administration, it was for the administrators to bring the claim against the bankers. The administrators, however, declined to bring an action on behalf of LWE, and also declined to assign the cause of action to the directors.
The UK High Court today took a crucial step towards resolving the difficult issue of when administrators must pay rent.
- INTRODUCTION
A simple, clear and effective insolvency regime is a vital element in attracting both domestic and foreign investment in a jurisdiction like Russia. To be effective, an insolvency regime has to balance the interests of various classes of creditors, as well as the interests of creditors generally in relation to other interested parties, such as shareholders or participants. An insolvency regime is expected to give the debtor an opportunity to discharge its obligations and continue its business activity.