Further to our previous article, which can be found here, we consider the key issues with which the Court faced, the technical legal analysis underpinning this judgment and our view on what this may mean for energy suppliers, and the sector as a whole, looking forward.
Background - what was the application and why was it needed?
In the context of rising energy and raw material prices, the German federal government has passed an Act regarding the Mitigation of Consequences of a Crisis under Restructuring and Insolvency Laws (Sanierungs- und insolvenzrechtliches Krisenfolgenabmilderungsgesetz – "SanInsKG").
By recognising the state government as a secured creditor, the Rainbow Papers judgment exposes the Insolvency and Bankruptcy Code to incongruous uncertainty
Introduction
There is a worrying trend in the construction industry: contractor insolvencies are on the rise.
According to a release from The Insolvency Service, the construction industry accounted for 3,213 insolvency cases in the 12 months leading up to April 2022. This equates to almost a fifth (19%) of the overall cases of insolvency and, more worryingly, these numbers are still growing. These insolvencies have occurred throughout the market but have particularly affected smaller and mid-tier contractors.
This week’s TGIF considers a recent case where a liquidator obtained judicial advice to commence proceedings against a director and related company concerning the unlawful receipt and use of trust money.
Key takeaways
The Hon’ble Delhi High Court (“Delhi HC”) in Insolvency and Bankruptcy Board of India vs State Bank of India & Ors. has held that the National Company Law Tribunal (“NCLT”) cannot assume to itself the power of declaring any provision of the Insolvency and Bankruptcy Code, 2016 (“IBC”) or the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) as illegal or ultra vires.
The Dutch Act implementing the EU Directive on Insolvency, Restructuring and Second Chance (the Restructuring Directive) enters into force on 1 January 2023 and will amend the current Act on Court Confirmation of a Private Restructuring Plan (the WHOA) to some extent. Below we have set out some of the material changes as a result of the implementation.
A preventive restructuring framework and second chance
It has often been said that the route of winding up a company is the remedy of last resort in a creditor’s odyssey to recover a debt owed to it. This is as not only would the granting of a winding up order have drastic repercussions for the debtor company, but there is also no guarantee that the creditor would be able to recover the full debt thereafter.
On October 12, the Honorable Robert D. Drain, U.S. Bankruptcy Judge for the Southern District of New York, issued his final decision from the bench in the bankruptcy cases of supermarket chain Tops Holdings II Corporation (“Tops”). The decision came in an adversary proceeding seeking to avoid four dividend payments totaling $375 million from 2009–2013 paid to the Tops’ private equity investors (the “PE Group”) as constructive and actual fraudulent transfers and also hold the director-defendants responsible for breaching their fiduciary duties.
The Royal Court in Guernsey will soon be able to wind up foreign companies.
Recent changes to Guernsey's insolvency regime will mean that, for the first time, foreign companies can be compulsorily wound up in Guernsey.