The eyes of the financial world were on the U.S. during 2013. The view was dismaying and encouraging in roughly equal parts. The U.S. rang in the new year with a post-last-minute deal to avoid the Fiscal Cliff that kicked negotiations over "sequestration"—$110 billion in across-the-board cuts to military and domestic spending—two months down the road, but raised income taxes (on the wealthiest Americans) for the first time in two decades.
A SUMMARY OF MAJOR DEVELOPMENTS IN KEY AREAS GENERAL COUNSEL UPDATE 27 February 2014 LEGAL GUIDE EDITION 37
The Momentive Decisions: Cram-Down Interest Rates and Make-Whole Mania
Background
Administration
Administration is a procedure by which a company can be reorganised and its assets realised whilst being protected by a moratorium from actions brought by creditors (explained below).
Objectives
A company can be put into administration if the objectives of administration are likely to be achieved. These are set out in the Insolvency Act 1986 (the “Act”)4 as:
The rapid evolution of a robust secondary market for claims against the three largest failed Icelandic banks provides a powerful example of the prompt adaptation of an existing secondary-market legal framework -- originally developed in the US and Europe -- to a complex and novel bankruptcy regime and trading environment.
On December 21, ISDA announced that it sought and was granted permission to intervene in the Lehman Brothers International Europe case in order to ensure that the arguments reflecting the market's interpretation of Section 2(a)(iii) of the ISDA Master Agreement were made before the court. The court agreed with ISDA that Section 2(a)(iii) is "suspensive" in effect. ISDA Release.
Through the years, arbitration as a mode of dispute resolution has gained prominence because it promotes party autonomy with minimal court intervention, amongst others.
Anyone with a passing knowledge of derivatives law will be aware of the controversy created by section 2(a)(iii) of the ISDA Master Agreement.1 Differing interpretations of 2(a)(iii) have emerged in litigation in London and the United States since the collapse of Lehman Brothers. The recent judgement of the Court of Appeal in London in Lomas v. JFB Firth Rixson Inc2 brings significant clarity from the English perspective. The decision upholds the interpretation of section 2(a)(iii) favoured by the derivatives market.
From modest beginnings, the concept of Cross-Border Insolvency Protocols as a means of enhancing cooperation between administrations in international cases has become an established practice in major cases. From their origins in the International Bar Association’s Cross-Border Insolvency Concordat through the early Protocols in Maxwell Communication and Everfresh Beverages, Protocols have become a mainstay in international reorganizations and restructurings.
On 15 January 2020 the States of Guernsey is due to pass the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020, making Guernsey an even more desirable forum for insolvency proceedings. The new legislation is set to modernise Guernsey insolvency law, bringing the jurisdiction into line with not only the UK but other offshore jurisdictions such as the British Virgin Islands and the Cayman Islands.