In brief

Yes, says the Delaware Bankruptcy Court in the case of CII Parent, Inc., cementing the advice routinely given by bankruptcy counsel to borrowers in default. We always counsel borrower clients in default of the risk associated with lenders taking unilateral actions pre-filing, stripping debtors of valuable options and assets. Thus, we normally recommend to always obtain a forbearance and undertake the preparations required to file a bankruptcy petition immediately upon forbearance termination, although whether or not to file depends on variety of factors that should be considered.

The Australian government introduced two significant new insolvency solutions following the enactment of the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth), as part of the federal government’s JobMaker Plan in response to the COVID-19 pandemic. The second of these solutions is the Small Business Debt Restructure Process (SBDRP).

The benefits of entering a SBDRP include:

As stated in our previous article, a statutory demand must be addressed to the proper entity (including the correct ACN number) at the registered office address of the debtor company (which can be searched by an ASIC search of the debtor company) in order for it to be considered valid. This statutory demand can be left at or posted to the debtor company’s registered office address or delivered personally to a director of the debtor company who resides in Australia: see section 109X(1) of the Corporations Act 2001 (Cth) in this regard.

In Re Zipmex Pte Ltd and other matters [2023] SGHC 88, the Singapore High Court imported into the Singapore restructuring regime the US concept of an "administrative convenience class" in a scheme voting exercise. This concept allows debtors to obtain an approval from a large number of low value creditors without those creditors being involved in the voting exercise. This reduces the administrative burden on restructuring entities.

A recent Court of Appeal decision held that receivers are statutorily obliged to discharge preferential costs from assets available after deducting costs and expenses of a receiverirst line

The issue

In what might prove to be an important ruling, on April 12th the Bankruptcy Court for the District of Delaware ruled that a secured creditor had, before the debtor filed bankruptcy, properly exercised an irrevocable proxy to change the management of the debtor’s subsidiary. The Court also ruled that the creditor had not violated the automatic stay by refusing to relinquish the proxy following the bankruptcy filing. Though a clear victory for secured creditors, the Court’s ruling hinges on a well drafted proxy provision.

The Facts of the Case

A members voluntary winding up (MVWU) is implemented in circumstances where the company’s members no longer wish to retain the company’s structure because its existence is no longer required or useful. It is only available if the company in question is solvent.

A MVWU is the only way to fully wind up the affairs of a solvent company. All outstanding creditors are paid in full, and any surplus assets are distributed to its members. A MVWU also ensures that the interests of the company’s members are protected while the company structure is dismantled.

There are many cases about the appointment of administrators, not so many about terminating their appointment. Re Central Properties Holdings Ltd (In Administration) [2023] EWHC 829 (Ch) is one.

The United States Bankruptcy Court for the Southern District of New York has ruled that a creditor or trustee seeking to recover a subsequent transfer under Section 550(a) of the Bankruptcy Code need not obtain a judgment of avoidance against the subsequent transferee before proceeding with the recovery action.