The Insolvency and Bankruptcy Code, 2016 (“IBC”/”Code”) came into force on 28th May, 2016 with the primary objective of consolidating and amending the laws of reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner to maximise the value of their assets. The Code has been evolving over the last six years, with changing scenarios and adapting to practical circumstances along the way. As a result, the Code has undergone amendments from time to time.
In the matter of Rare Earth Magnesium Technology Group (provisional liquidators appointed) (for restructuring purposes only) [2022] HKCFI 1686 (date of judgment: 6 June 2022)
Creditors seeking to enforce an undisputed debt against a solvent foreign non-Hong Kong company in the courts of Hong Kong will welcome the recent judgment of the Court of Final Appeal (CFA) in Shandong Chenming Paper Holdings Limited v Arjowiggins HKK 2 Limited [2022] HKCFA 11, as the CFA helpfully backs a broader and more commercially holistic interpretation of a key tenet relating to how Hong Kong courts approach certain threshold assessments involving winding up petitions brought by creditors in Hong Kong against foreign incorporated companies.
On 27 May 2022, the Honorable Mr. Justice Harris sanctioned a scheme of arrangement introduced by Rare Earth Magnesium Technology Group Holdings Limited, which was incorporated in Bermuda, to restructure its debt. The Reasons for Decision handed down on 6 June 2022 contain detailed discussions on, among other things, the use of schemes in cross-border insolvencies.
Congress and the President finally extend the $7.5 million debt limit for Subchapter V eligibility:
- by “unanimous consent” in the Senate;
- by a vote of 392 – 21 in the House; and
A legislative history of the new law is at this link.
The new law is bi-partisan and uncontroversial. But there are some bells and whistles, as discussed below.
“SUNSET” – Again!
In the recent judgment In the Matter of GTI Holdings Limited delivered on 15 March 20221 , the Cayman Islands Grand Court reiterated the importance of principles of comity in cross-border insolvency matters and the central function of the place of incorporation.
A copy of the full judgment is available here.
Background
Conyers were instructed by Silver Base Group Holdings Limited (“Silver Base”) in relation to a successful application for the appointment of “light-touch” provisional liquidators for restructuring purposes before the Grand Court of the Cayman Islands.
Introduction
In the recent judgment of In the Matter of Margara Shipping Limited (the “Margara Decision”)1 the Cayman Islands Grand Court provided some useful guidance on the basis on which a company can be restored to the Register of Companies (the “Register”) and subsequently wound up pursuant to section 159 of the Companies Act (2021 Revision) (the “Companies Act”) and the Grand Court Rules (2022 Consolidation) (“GCR”), Order 102, Rule 18.
The Legal Basis to Restore and Wind Up A Company
Facts
In April 2015, administrators were appointed to several companies within the NewSat Group. Secured lenders appointed receivers who attempted, unsuccessfully, to restructure the business. Following this, the group was placed into liquidation.
Insights
In its judgement delivered on 25 February 2021, in the names “Dr. Antoine Naudi as special attorney on behalf of the foreign company UR s.r.l vs. Talocan Ltd of Malta”, the Civil Court (Commercial Section), presided over by Hon. Justice Joseph Zammit McKeon, analysed the requirements necessary to uphold a dissolution and consequential winding up request in terms of Article 214 (2) (a) (ii) of the Companies Act, Chapter 386 of the Laws of Malta.
Facts of the Case