As part of an intended comprehensive amendment of German insolvency law, the German Federal Ministry of Justice has prepared a draft of a new law to facilitate the reorganization of enterprises (“Reorganization Facilitation Act”). The new law will curtail the rights of shareholders of insolvent companies and allow capital measures and other corporate measures to be taken in the insolvency of a company without the participation of the shareholders. The new regulation is of interest to investors because it will significantly simplify the purchase of the shares of an insolvent company.

Many multinational corporations ("MNCs") are either restructuring or actively considering restructuring their China operations, given the current economic conditions and forecasts. Restructuring efforts often include consolidating legal entities, business units, and operations; closing down operations and factories; and workforce reductions. Implementing such restructuring efforts often raises complicated legal issues, many of which require careful analysis in light of recent legislation and policy considerations.

Consolidating Operations

Valuation is a critical and indispensable part of the bankruptcy process. How collateral and other estate assets (and even creditor claims) are valued will determine a wide range of issues, from a secured creditor’s right to adequate protection, post-petition interest, or relief from the automatic stay to a proposed chapter 11 plan’s satisfaction of the “best interests” test or whether a “cram-down” plan can be confirmed despite the objections of dissenting creditors.

In a judgment of November 29, 2007 that is of particular interest to financial institutions involved in asset-based lending, the German Federal Supreme Court (Bundesgerichtshof) allayed concerns that a global assignment (Globalzession)—the assignment of all existing and future trade receivables to a lender to secure loans—would not survive the insolvency of the respective originator.[1] This decision was eagerly awaited because various judgments of German Higher Regional Courts (Oberlandesgerichte) had raised concerns lately that the security interest over receivables created in the last th

A fundamental premise of chapter 11 is that a debtor’s prebankruptcy management is presumed to provide the most capable and dedicated leadership for the company and should be allowed to continue operating the company’s business and managing its assets in bankruptcy while devising a viable business plan or other workable exit strategy. The chapter 11 “debtor-in-possession” (“DIP ”) is a concept rooted strongly in modern U.S. bankruptcy jurisprudence. Still, the presumption can be overcome.

Aim of the Reform

On March 8, 2014, Spain enacted urgent measures to govern refinancing and restructuring of corporate debt ("RDl 4/2014"), modifying several provisions of the Spanish Insolvency Act (the "Act"). The objective of the reform is to improve the legal framework that governs refinancing agreements to remove obstacles that have previously impeded the successful execution of restructuring and refinancing transactions. 

Principal Amendments

Ohio-based, 102-year-old automobile parts manufacturer Dana Corporation and 40 of its subsidiaries filed for chapter 11 protection in the U.S. in March 2006. Dana’s operations, however, extend well beyond the borders of the U.S. — the company has 46,000 employees in 28 countries. Integrating a complex restructuring of Dana’s U.S. operations in chapter 11 with Dana’s extensive operations and obligations abroad has posed some unique challenges to Jones Day’s restructuring professionals.

Despite the downturn in many retail sectors, retailers should not automatically adopt a “glass half empty approach” but instead view the impending cycle as creating opportunities for companies in both the U.S. and globally.

Pre-pack administrations are becoming more common. Four Holdings' purchase of Agent Provocateur illustrates the attraction of pre-packs — the ability to cherry-pick the best assets, acquire the goodwill of a well-known business that continues to trade, and retain its key staff without having to take on liabilities to creditors —and why existing management is likely to be supportive.

Editor’s Note: This is a new one for us at The Bankruptcy Cave. We are starting a series of primers, covering a narrow range of law but with more depth than just “here’s a recent case.” And also, we have our first edition of “The Bankruptcy Cave Embedded Briefs” – top quality briefs on a certain issue, feel free to download to your own form files or come back and grab ’em when you need ’em. Let us know what you think – we are always trying to improve things around here for our readers.