When the restructuring officer regime was introduced, it was assumed by many that joint provisional liquidators would no longer be appointed for restructuring purposes, having been overtaken by the new regime.  The recent decision of Re Kingkey Financial International (Holdings) Ltd suggests that this assumption may not be sound.  It also raises several interesting points regarding the restructuring officer regime that merit further consideration.  This article considers the Kingkey case, and the points arising from it

In my most recent blog post, I provided some tips for creditors who find themselves in the Subchapter V arena. This is somewhat of a follow-up to that one.

ICC Judge Mullen’s judgment in Sriram v Revenue & Customs & Anor [2024] EWHC 853 (Ch) follows an application by the bankrupt, Ms Sriram, to annul a bankruptcy order made against her on a petition of HMRC in circumstances in which proper service of both the statutory demand and the petition was contested and in which her capacity to understand the proceedings against her was also in issue.

Regarding the draft Directive proposed by the European Commission that harmonises facets of insolvency law, it is worth noting that the draft Directive does not prevent EU member states from maintaining or adopting provisions that offer greater protection to creditors than those outlined in the Directive. Since the existing Croatian law framework on contestation rights provides numerous and detailed rules that go beyond the draft Directive, its implementation is not expected to require extensive or substantial modifications.

Plusieurs décisions judiciaires notables et mises à jour législatives importantes pour les prêteurs commerciaux, les entreprises et les professionnels de l’insolvabilité ont marqué l’année 2023. Le présent bulletin résume les principaux développements survenus en 2023 et met en lumière les points saillants à connaître en 2024.

1. Régime de priorité

En 2023, plusieurs affaires et mises à jour législatives ont soulevé des questions importantes concernant le régime de priorité dans le cadre des procédures d’insolvabilité.

Insolvency proceedings and avoidance actions play a significant role in safeguarding creditors' interests and maximising the insolvency estate in Türkiye. The European Commission's Proposal for a Directive (COM (2022)702) aims to harmonise contestation rights in insolvency across EU member states. Although Türkiye is not an EU member states, Türkiye has similar avoidance actions regulated under its own insolvency legislation, the Turkish Enforcement and Bankruptcy Law (EBL).

Overview

On April 22, 2024, in the chapter 11 cases of GOL Linhas Aéreas Inteligentes S.A.

To file bankruptcy in the U.S., a debtor must reside in, have a domicile or a place of business in, or have property in the United States. 11 U.S.C. § 109(a). In cross border chapter 15 cases, courts have considered whether a representative of a foreign debtor must satisfy that jurisdictional test.

Debtor’s Chapter 11 counsel cannot be compensated for services performed after a trustee is appointed and the debtor removed from possession.

• That’s the rule of law in the Fifth Circuit and in a not-for-publication decision of the Ninth Circuit’s Bankruptcy Appellate Panel, based on a U.S. Supreme Court ruling.

So . . . the question is, what about Subchapter V? Does that same no-compensation rule apply in Subchapter V when the debtor is removed from possession?

Ninth Circuit BAP Opinion

As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of many, the LLC is insolvent. See our prior Alert. The disparity of substantive creditor rights depending entirely on corporate form results from two aspects of Delaware law.