1. Introduction

The market for distressed transactions is expected to grow in 2023 but will also become more difficult. This makes it all the more important to deal with the specific legal aspects of acquiring a company in times of crisis or insolvency at an early stage.

2. A look back at 2022 and ahead to 2023

The new year has seen a rapid pace being set in terms of anticipated and actual legislative, regulatory and common law changes across Australia’s restructuring and insolvency regimes. The federal government’s inquiry into restructuring and bankruptcy laws is ongoing against a backdrop of sustained monetary policy interventions.

This half-yearly update summarises significant insurance coverage cases in the English courts in the second half of 2022 concerning Covid-19 business interruption insurance, jurisdiction and rights against insurers of insolvent companies.

Significant Insurance Coverage Cases in H2 2022

Covid-19 BI Cases:

Cryptocurrency is a hot topic in the legal industry and one with which the legal world is really just starting to grapple. This is ever more prevalent with a number of recent high-profile crypto insolvencies including Three Arrows Capital, Celsius Network and FTX.

In the recent decision of IDBI Bank v. Indian Oil Corporation Limited, the National Company Law Appellate Tribunal (“NCLAT”) has held that an irrevocable and unconditional bank guarantee can be invoked even during moratorium period in view of the amended provision under Section 14 (3) (b) of the Insolvency and Bankruptcy Code, 2016 (“IBC”).

Brief Facts

Introduction

With the cost-of-living crisis and a possible recession facing the UK economy, it is not surprising that government statistics show insolvencies are rising significantly, with a substantial increase on pre-pandemic levels, and up to 80% higher than the previous 12-month period.

An emerging trend within insolvencies is the recovery of crypto assets, whether the businesses are within the crypto sector, or whether it is any other entity holding value in cryptocurrencies.

The Irish courts have long recognised the principle that directors of companies that are insolvent must have regard to the interests of the creditors of the company as a matter of Common Law.

The European Union (Preventive Restructuring) Regulations 2022 (the "Regulations"), which were signed into law last year, have reinforced and refined this principle in certain respects.

In its decision of October 27, 2022 (IX ZR 145/21), the German Federal Court of Justice (BGH) ruled on a long-running dispute under German insolvency law. In its decision, the Court assumed that the insolvency administrator's right of realization under section 166 German Insolvency Code (InsO) does not extend to other rights.

In a recent judgment (Durose & Ors v Tagco BV & Ors [2022] EWHC 3000 (Ch)), the Court was asked to decide whether the actions of a private equity investor demonstrated "unfair prejudice". In this insight we cover what steps companies should take in light of the Court's ruling.