Since Article 3: 305a of the Dutch Civil Code entered into force on 1 July 1994, a legal person (usually a foundation) can institute legal proceedings that serve to protect interests outlined in its articles of association (for example, recovering damage caused to the members of the foundation concerned). The mass claims foundation was born.

The Covid-19 pandemic has had a severe impact on the economy. This has given rise to an increasing number of claimants with claims against insolvent businesses.

In these circumstances, a third-party claimant would usually notify the company’s insolvency practitioner of its claim. The claimant is then required to pursue its recovery as part of the insolvency process alongside other creditors.

The Third Parties (Rights Against Insurers) Act 2010 (the 2010 Act)¹

Correcting a widespread mistake, Mr Justice Harris in Re China Ocean Industry Group Ltd [2021] HKCFI 247 held that the Court has no jurisdiction to make a validation order after a winding-up petition in respect of the issue of new shares and convertible bonds (“CBs”).

The correct position is that a company subject to a winding-up petition may issue new shares and CBs without a validation order.

Background to the widespread mistake and the present case

Chapter 7 bankruptcy cases are straight liquidations sought by debtors who wish to have most or all of their debts discharged. In Chapter 7 cases, the Chapter 7 trustee obtains control over the debtor’s assets and evaluates whether any equity exists that would offset the costs of selling those assets. If the bankruptcy estate will likely profit from selling the debtor’s assets, the Chapter 7 trustee will liquidate the assets and distribute the proceeds to creditors. This is called an “asset case.”

A recent decision of the Eastern Caribbean Court of Appeal has confirmed that, whilst the courts of the British Virgin Islands (BVI) will recognise the appointment of foreign representatives (including liquidators and trustees in bankruptcy) as having status in the BVI in accordance with his or her appointment by a foreign court, they may only provide assistance to representatives from certain designated countries.

The Department of Enterprise, Trade and Employment commenced a public consultation process on 8 February 2021, in relation to proposed legislation which will allow for a new restructuring procedure for the rescue of small companies.

On 1 January 2021, the Act on confirmation of private restructuring plans (Wet homologatie onderhands akkoord, the “Dutch Scheme“) came into effect. At time of writing (25 February 2021), the Dutch courts have rendered 10 judgments in connection with the Dutch Scheme. This blog provides you with the highlights of this case law.

1. General observations

What were the major developments in the Cayman market in 2020?

Just after 5:00 p.m. Central Time on February 23, 2021, Belk, Inc. and its affiliates filed chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas, along with a proposed “prepackaged” plan of reorganization. Before midnight, the US Trustee objected to Belk’s plan, and, by 8:00 a.m. the next day, the parties were in court to decide plan confirmation. Two hours later, Bankruptcy Judge Marvin Isgur confirmed the plan, and it became effective that afternoon, just 20 hours after the Chapter 11 cases were filed.

Prior to the COVID-19 pandemic, the Bankruptcy Code generally has been interpreted to require debtors to pay rent obligations on time under unassumed real property leases as those obligations arose post-filing and pre-rejection. This result was driven by 11 U.S.C. § 365(d)(3), which requires the debtor to “timely perform” all obligations until the lease is assumed or rejected, with one narrow exception. That exception permits the court to allow the debtor to extend the time of performance of any obligation within the first 60 days of the case but not beyond the 60-day period.