Tomás M Araya and Lucía Carro, Bomchil

This is an extract from the second edition of The Guide to Restructuring published by Latin Lawyer. The whole publication is available here.

Introduction

WHITE PAPER An Update on Insolvency in the Australian Construction Industry The construction sector in Australia has long been affected by insolvency and broader liquidity issues. In the last year, construction companies accounted for 26% of businesses that entered into insolvency, and insolvencies in the construction sector more than doubled. This year, contractors have been further squeezed by inflation, supply chain issues and labour market shortages. As the federal government has wound back its COVID-19 economic stimulus packages, further collapses seem inevitable.

Trustees in bankruptcy are granted protection from civil claims for acts and omissions under the Bankruptcy and Insolvency Act (“BIA”), as the statute requires that a plaintiff obtain leave of the court to pursue some types of claims.

Good afternoon.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of July 11, 2022. There were many interesting cases this week.

In Humphrey v. Mene Inc., the Court allowed an appeal in part and reduced damages for wrongful dismissal from twelve months to seven as a result of the plaintiff’s failure to reasonably mitigate by accepting another comparable position seven months after she had been dismissed. The awards of aggravated and punitive damages were upheld.

The Bankruptcy Protector

Cathro (liquidator), in the matter of Petsamo No 14 Pty Ltd [2022] FCA 399

Summary

On 30 March 2022 the High Court sanctioned a restructuring plan for Smile Telecoms Holding Limited in which the court for the first time allowed the exclusion of all but one class of creditors from voting on a restructuring plan. The sanction hearing considered several salient issues around challenges made to a plan by a creditor or shareholder, questions of jurisdiction and the concept of a "compromise or arrangement" in Part 26A of the Companies Act 2006 ("CA 2006").

Background

A confession of judgment lets a creditor take a judgment without notice to the debtor, who usually first learns of the lawsuit when the creditor seizes his bank accounts and takes related steps. Here are strategies for representing commercial debtors facing such judgments. 

Your developer client borrows $5 million from a bank to improve a strip mall on Chicago’s northwest side. The developer signs a promissory note with a floating interest rate of 1 percent over the Wall Street Journal prime rate, and its principal shareholder signs a guaranty. 

Smile Telecoms Holdings Limited (“Smile”), a Mauritian company, has recently had its second restructuring plan sanctioned by the High Court in England. The case contains some important markers for those involved in restructuring plans, particularly those plans which involve international elements or which seek to prevent out-of-the-money creditors from voting on the plan.

Background

On 30 March 2022, the English court sanctioned the most recent restructuring plan proposed by Smile Telecoms Holdings Limited (Smile).