The Package Travel Regulations (“PTRs”), which came into force in 2018, have been tested significantly in recent years with failures such as Thomas Cook and Monarch, in addition to the COVID-19 pandemic.
In the October 2023 edition of the Restructuring Department Bulletin, we highlight recent decisions and developments impacting the restructuring arena and share the latest news on the Paul, Weiss Restructuring Department.
The National Company Law Appellate Tribunal, Principal Bench, New Delhi (“NCLAT”) has in the case of SVA Family Welfare Trust & Anr v. Ujaas Energy Limited & Ors inter alia held that a resolution plan can contain a clause which extinguishes security interest, such as personal guarantees, after paying compensation to the financial creditor in whose favour such security interest was created.
The recent rise in company insolvencies has been driven by a high number of creditors’ voluntary liquidations (CVL). The outlook for the rest of 2023 is that there will be an even higher number of companies entering a formal insolvency process in almost every sector and industry.
A high proportion of these insolvencies are small businesses (SME’s), some of which had managed to keep going with the help of Government-led support packages and bounce back loans, but with rising interest rates and inflation, they are now struggling to repay loans and obtain financing.
The Eighth Circuit held that “avoidance actions [e.g., preferences, fraudulent transfers] can be sold as property of the [Chapter 7 debtor’s] estate.” In re Simply Essentials, LLC, 2023 WL 5341506, *1 (8th Cir. Aug. 21, 2023). On a direct appeal from the bankruptcy court, the court affirmed the bankruptcy court’s granting of the trustee’s motions to compromise and sell property under Bankruptcy Code §363(f). A creditor had objected, arguing unsuccessfully that “avoidance actions… are not part of the bankruptcy estate ….” Id.
INTRODUCTION
One of the biggest changes brought in by the Insolvency and Bankruptcy Code, 2016 (“Code”) was the demarcation between treatment of interest vis-à-vis financial debt and operational debt. Over time, Courts have interpreted the Code with the aim to strengthen the foundation and resolve uncertainties. One such exercise, which has greatly impacted the insolvency regime, is the inclusion of interest in operational debt.
PHASE 1 – EXCLUSION OF INTEREST
On March 12, 2023 the New York State Department of Financial Services appointed the FDIC as receiver for Signature Bank. The FDIC created a bridge bank, Signature Bridge Bank (“Bridge Bank”), and transferred all deposits and substantially all of Signature Bank’s assets to the Bridge Bank. No consents or other restrictions on transferring rights and obligations of Signature Bank are applicable for the transfer to the Bridge Bank. The receivership is governed by the Federal Deposit Insurance Act (“FDIA”). Under the FDIA, the FDIC succeeds to the rights and powers of Signature Bank.
Executive Summary
In a radical departure from settled case law, the English High Court has eroded the protections of English law creditors guaranteed by the Rule in Gibbs1 .
I. INTRODUCTION
This week’s Dekagram examines what happens when rules change: that transitional period between one set of rules and another, when no one is quite sure what’s happening. We seem to have had quite a few of those recently; just as we were getting over the horrors of the Withdrawal Act, along came the changes to the Fixed Recoverable Costs regime – changes which, we remind readers, remain in a state of flux, notwithstanding that the new regime is now in force.
Res Judicata and Rule Changes