The Bankruptcy Protector

Four decades and several years ago, Congress repeals the Federal Bankruptcy Act of 1898 and replaces it with the Bankruptcy Reform Act of 1978, aka the “Bankruptcy Code.”[Fn. 1]

A decade later, Justices on the U.S. Supreme Court are still disparaging the new Bankruptcy Code as the “sweeping changes Congress instituted in 1978” and “the radical reforms of 1978.”[Fn. 2]

The High Court has made an order appointing an inspector to investigate alleged fraud and unlawful activity by a company. It appears that this is the first time the order has been made on the application of a creditor seeking to recover its “investment”.

Part 13 of the Companies Act 2014¹ sets out the mechanism for the statutory investigation of the affairs of a company. Chapter 2 provides for the court appointment of an inspector to carry out a fact-finding investigation and report to the court. This is a discretionary relief.

As winter draws near, the days grow shorter, temperatures dip, and businesses will be turning on the lights longer and the heating up higher; all leading to higher energy bills. But, with continuing volatility in the energy market, how many businesses can afford to do so and will energy bills sound their death knell?

Four years after New York grocery chain Tops’ exit from Chapter 11, U.S. Bankruptcy Judge Robert Drain ruled that the Tops’ Chapter 11 trustee may proceed with litigation against certain private equity investors. The trustee alleged that the investors drove the company into bankruptcy by paying themselves more than $375 million in dividends while neglecting to address Tops’ unfunded pension liabilities.

The Futures and Derivatives Law of the People’s Republic of China (‘FDL’) was adopted by the National People’s Congress on April 20th and is effective from August 1, 2022. The FDL is a historical development for the financial industry in China. Namely, it aligns future and derivative legislation with international netting practices and promotes standardisation of industry and market development.

The FDL Framework

Cryptoassets are traded on a global basis. Indeed, the markets are even more global and constant than markets in more conventional financial instruments, rivalled only perhaps by the FX markets in their reach.

It is often said that failure is an essential step of learning. Business failure is an inherent process of economic activity so much so that it is estimated that some 200,000 firms in the European Union go bankrupt annually in the European Union. Around half of new operations fail to get through the first five years, and bankruptcies usually account for 15% of such failures.

The High Court (Court) has appointed an inspector to investigate the affairs of a company following the first recorded application by a creditor, under Section 747 of the Companies Act 2014 (Act).

The Facts

The applicant, a creditor of WFS Forestry Ireland Limited (Company), and at least seventeen others, claimed that investments they made in the Company, in the form of loans and other advances, were not repaid when due.

Early contingency planning can significantly reduce the shock of customer or supplier insolvency

In this edition of our distressed supply chains series, we consider the three key factors in contingency planning for potential insolvency in the supply chain, being (i) early planning analysis and due diligence, (ii) regular monitoring of key supply chain relationships; and (iii) taking early action if something goes wrong.