Insolvency set-off is an important quasi-security device for parties engaging in trade or other dealings with a company. It enables mutual debts owed between a party and a company to be set off against each other if the company goes into judicial management or liquidation.

A guarantor’s rights of subrogation are provided for in Sections 140 and 141 of the Indian Contract Act, 1872 (“ICA”). These rights allow a guarantor to step into the shoes of the creditor, upon fulfilling the debtor’s payment obligations to the creditor. This means that the guarantor assumes all the rights including the security that the creditor enjoyed against the principal debtor.

Introduction

The Supreme Court’s landmark decision in Harrington v. Purdue Pharma L.P. – holding that the Bankruptcy Code does not authorize the release of third-party claims against non-debtors in a reorganization plan without the consent of the affected claimants – will have a lasting impact on mass tort bankruptcy cases and likely nullifies one of the primary benefits of the so-called “Texas Two-Step” strategy: obtaining third-party releases of the debtor entity’s non-debtor affiliates.

The economic picture has started to improve, with modest GDP growth in the first half of 2024. However, the enormous strains on business finances over the past four years have caused insolvency rates to rise sharply this year.

According to The Insolvency Service’s latest figures, company insolvencies in June 2024 were the third highest since monthly records started in 2020. Administrations in June 2024 were 22% higher than in June 2023, and the number of CVAs was 64% higher in June 2024 than June 2023.

Teacher Retirement System of Texas plans to reduce its private equity target allocation to 12% from a current exposure of 16.7% starting in October. The planned reduction, which may be implemented over a number of years. For now, the change in target allocation likely means reduced new commitments, while some of the rebalancing could be accomplished by fund AUM growth.

In the matter of BRS Refineries vs. . Mr. Supriyo Kumar Chaudhari, the NCLAT New Delhi upheld the order passed by the Adjudicating Authority (National Company Law Tribunal), Allahabad Bench, rejecting an appeal filed by BRS Refineries. The earlier appeal had challenged the action of the liquidator for JVL Agro Industries Ltd., to forfeit the earnest money deposit (EMD) of Rs. 96 lakhs pursuant to the e-auction of the assets of JVL Agro Industries Ltd.

Five best practices for retailers to manage cash, cut costs, and stay afloat as debt comes due

In late 2017, a Bloomberg headline read, “America’s ‘Retail Apocalypse’ Is Really Just Beginning.” The main culprit, the authors suggested, was the amount of high-yield debt on company balance sheets, which would balloon just as a record wall of debt across all industries came due.

High Court upholds decision that separate entities of foreign states may be immune from being wound up in Australia

Key takeouts

Under the framework of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), an asset reconstruction company (ARC) has wide powers to revive a company facing financial difficulties. It can use securitisation, reconstruction and recovery for quick resolution of distressed debt. As an alternative, the Insolvency and Bankruptcy Code, 2016 (IBC), allows ARCs with access to a formal resolution process, which has the advantage of the borrower emerging debt-free with a clean slate.