As we start the new year, we take a look back at some of our highlights from 2022, and offer our view for 2023.
A predicted wave of insolvencies on the horizon has been a recurring theme in the UK press since the start of the first Covid-19 lockdown. Most people would have predicted that forced closure of businesses and the restriction on consumers' ability to spend would lead to an increase in business and personal insolvency numbers. In reality, the wave didn't appear - at least not yet. In this blog we discuss the reasons why and whether the trends we are seeing might suggest a wave is coming in 2023.
What stopped the wave?
Once again, we reflect on the prior year for restructuring trends impacting private credit lenders. Last year it was all about “liability management”—the latest trend in which the limits of sponsor-favorable loan documents are being tested, in some cases past the breaking point.
The bankruptcy court presiding over the Chapter 11 cases of digital asset platform Celsius Network LLC and its affiliates (Celsius) issued a key ruling on January 4, 2023 (the Decision), by concluding that a significant portion of digital assets held in Celsius’ customer accounts are property of the debtors’ estates, and holders of such accounts accordingly are unsecured creditors.
Many cryptocurrency lenders have declared bankruptcy. These loss events are indicators of the significant losses the cryptocurrency market has experienced this year.
For investors who have suffered, an important consideration is how to capitalize on these losses. Accordingly, this article will analyze the recent Celsius Network (“Celsius”) bankruptcy and the tax strategy of writing off bad debt.
The Celsius Bankruptcy
The Department of Telecommunications is seeking to overhaul the law governing the provision of telecommunication services through the Draft Telecommunication Bill, 2022. The Bill also seeks to govern the provision of telecom services and, or, availability of network during insolvency proceedings in respect of a telecom licensee or assignee. While the DoT’s rationale for this is understandable, the proposed provisions may conflict with the Insolvency and Bankruptcy Code, 2016.
A draft of a preventive restructuring act is being discussed in the Czech legal environment to implement the EU directive on restructuring and insolvency (directive (EU) 2019/1023). The aim of the new legal regulation is to introduce an out-of-court restructuring model with shorter times to improve operations and the balance sheets of debtors in financial difficulties. Different forms of out-of-court restructuring are common and frequently used in many foreign jurisdictions, e.g. arrangements in England and Wales.
Již delší dobu se v českém právním prostředí diskutuje návrh zákona o preventivní restrukturalizaci, který do českého právního řádu transponuje směrnici o restrukturalizaci a insolvenci. Smyslem právní úpravy je zavedení mimosoudní formy restrukturalizace, což povede ke zkrácení ozdravného procesu dlužníků ve finančních obtížích. Mimosoudní formy restrukturalizace jsou v řadě zahraničních jurisdikcí obvyklé a užívané, např. obdobný proces v Anglii a Walesu (scheme of arrangement).
Earlier this month, the SDNY Bankruptcy Court answered one of the gating questions at the center of Celsius Network’s Chapter 11 bankruptcy regarding the ownership of the approximately $4.2 billion in crypto assets.
Bankruptcy benefits for individual debtors are a tough sell—always have been. That’s because no one likes bankruptcy—unless they need it.
But relieving people from debts in unfortunate circumstances is essential to our collective way of life in these United States. That’s always been true.
What follows is the first of three installments on some history of bankruptcy laws through the ages, beginning with ancient times—and to the present in these United States.
Ancient Days