A restructuring plan completed earlier this year by Smile Telecoms notches up a number of firsts.
African telecommunications provider Smile Telecoms Holding Limited, incorporated in Mauritius, successfully completed a restructuring plan (the Plan) under Part 26A of the UK Companies Act 2006 at the end of March 2021.
The Plan features a number of novel actions, including:
PH Insight for News and Analysis of the Latest Developments from the Courts of England and Wales for August 2021
In this edition. . .
The U.S. Court of Appeals for the Third Circuit recently affirmed lower court rulings that a bankrupt debtor was entitled to receive damages and attorneys’ fees for a creditor’s violation of the automatic stay in bankruptcy.
In so ruling, the Court held that:
On September 1, 2021, Judge Robert Drain issued a much-anticipated oral ruling approving Purdue Pharma L.P.’s plan of reorganization. The plan, which has garnered significant attention from the media, legislators, academics, and practitioners, releases current and future members of the Sackler family and many of their associates and affiliated companies – none of whom filed for bankruptcy themselves – from liability in connection with any possible harm caused by OxyContin and other opioids that Purdue Pharma manufactured and distributed.
When creditors try to recover debt from a distressed company in different jurisdictions, they will incur significant costs. In particular, in Hong Kong, the creditors could apply to the High Court for sanctioning a scheme of arrangement, in the hope of settling the debt. While the High Court would decide on whether it is appropriate to sanction the scheme, it would also consider if it is appropriate for the creditors to pursue parallel proceedings in multiple jurisdictions.
The Paycheck Protection Program (“PPP”) was a forgivable loan program administered by the US Small Business Administration (“SBA”) that was created as part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in March 2020. The PPP ended on May 31, 2021. Since the passage of the CARES Act, litigation has ensued over whether companies in bankruptcy are eligible to receive PPP loans.
In an underreported amendment to the Bankruptcy Code, the Small Business Reorganization Act amended §547(b) of the Code to add an explicit requirement for the bankruptcy trustee or debtor in possession to conduct “reasonable due diligence” before filing a preference action. The apparent goal of this amendment to the Bankruptcy Code is to reduce the number of frivolous preference lawsuits pursued by trustees.
Introduction
In the recent case of Re Grand Peace Group Holdings Ltd [2021] HKCFI 2361, which concerns the winding-up of a foreign incorporated listed company, the Court of First Instance revisited the 2nd core requirement and considered whether the possibility of the court making an order to compel the directors of the company to execute the documents necessary for the liquidators to take control of the company’s BVI subsidiaries would be sufficient to be considered as a real possibility of benefit to the petitioner.
The recent case of Re China Bozza Development Holdings Ltd [2021] HKLRD 977 demonstrated the attitude and increased scrutiny of the Hong Kong Companies’ Court towards offshore soft-touch provisional liquidation.
The leading authority on the meaning of soft-touch is the British Virgin Islands case of Re Constellation Overseas Ltd BVIHC (Com) 2018/0206,0207,0208, 0210 and 0212 . (§3) :
Whether a contract is "executory" such that it can be assumed, rejected, or assigned in bankruptcy is a question infrequently addressed by the circuit courts of appeals. The U.S. Court of Appeals for the Third Circuit provided some rare appellate court-level guidance on the question in Spyglass Media Group, LLC v. Bruce Cohen Productions (In re Weinstein Company Holdings LLC), 997 F.3d 497 (3d Cir. 2021).