In a decision delivered by Delhi High Court on June 24, 2024 in the case of The National Sewing Thread Company Limited v. Deputy Commissioner of Income Tax (2024 DHC 4771-DB) it was held that once a resolution plan is approved by the adjudicating authority, the claims not included in the resolution plan stand extinguished, and the same is binding on all stakeholders, including the Central and State governments.
They say every man needs protection, they say that every man must fall.1
File your proof of claim before the bar date. That’s a principle every creditor in a bankruptcy case should adhere by. But on June 7, 2024, the United States Bankruptcy Court for the Southern District of New York may have increased the degree of diligence parties need to conduct to determine whether they are a potential creditor in a case and therefore required to file a proof of claim.
What happens to a company at the end of an administration is a question that probably only keeps insolvency anoraks up at night.
There are a limited number of potential options, with the rescue of the company as a going concern being the number one objective to which all administrators aspire. However, more often than not, an administration will end with the company entering liquidation or, where the company has no property to permit a distribution to creditors, the dissolution of the company.
In Joint and Several Liquidators of Yes! E-Sports Asia Holdings Limited (in Liquidation) v Holman Fenwick Willan (A Firm) [2024] HKCFI 1197, the Court confirmed that solicitors should produce documents of former insolvent clients to liquidators when a request is made under section 286B(1)(d) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 (CWUMPO).
In In the matter of Academy Construction & Development Pty Ltd (subject to Deed of Company Arrangement) [2024] NSWSC 808, the New South Wales Supreme Court had to determine whether to terminate a Deed of Company Arrangement (DOCA) on the basis that it was oppressive, unfairly prejudicial or discriminatory.
Key Takeaways
Can non-compete and confidentiality protections in a rejected franchise agreement be discharged in bankruptcy?
The answer is, “No,” according to In re Empower Central Michigan, Inc.[Fn. 1]
Facts
Debtor is an automotive repair shop.
Debtor operates under a Franchise Agreement with Autolab Franchising, LLC. The Franchise Agreement has a non-compete provision, and there is a separate-but-related confidentiality agreement.
Another groundbreaking judgment from the ADGM Courts in the NMC matter 📢🇦🇪👨🏻⚖️ and another example of the ADGM Courts drawing important parallels between ADGM and English law.
English proceedings re NMC Health Plc are also ongoing. In his judgment at CFI on 8 July 2024, Sir Justice Andrew Smith found that:
1. The ADGM Courts can make an order in respect of the fraudulent carrying on of the business of a company prior to the time at which that company was continued in the ADGM.
A business rescue plan (a plan) should ideally benefit all affected persons in the best way possible, and a vote in support of its adoption or rejection should not be premised purely on self-interest while disregarding the collective benefit of all affected persons.
A recent High Court judgment highlighted this fact, setting aside the major creditors' votes on the grounds of inappropriateness, and investigating the creditors' conduct during the business rescue process.
The Abu Dhabi Global Market (the “ADGM”) courts have recently handed down their decision in NMC Healthcare Limited & Others v Shetty & Others ([2024] ADGMCFI 0007). The decision deals with several important principles in relation to fraudulent/wrongful trading liabilities under ADGM law. Given the ADGM re-domiciliation (or continuation) regime, enabling companies incorporated elsewhere to be redomiciled to ADGM with relative ease, the decision is likely to be of interest beyond the borders of the ADGM.