Kon Asimacopoulos and Gabe Harley, Kirkland & Ellis International LLP
This is an extract from the third edition of GRR's The Art of the Ad Hoc. The whole publication is available here.
Introduction
For a decade or more, restructuring professionals have predicted the coming of a bankruptcy boom. This may be the year those predictions finally come true. Inflation, interest rates, supply chain issues, global conflict and domestic politics have created a challenging macro environment. At the same time, dry powder abounds, with new distressed debt funds cropping up daily. Will this result in a bankruptcy tidal wave, or an increase in workouts and distressed M&A? Perhaps all of the above.
A recent Supreme Court decision serves as a reminder for directors to take specialist legal advice at an early stage to avoid potential liability
Managing a company’s business and making strategic and operational decisions is increasingly the subject of considerable internal and external pressures.
Background
On 5 October 2022, the Supreme Court handed down its long-awaited judgment in BTI 2014 LLC v. Sequana S.A. [2022] UKSC 25 concerning the trigger point at which directors must have regard to the interests of creditors pursuant to s.172(3) of the Companies Act 2006 (the "creditors' interests duty").
Over the last two years, courtesy of a once-a-century pandemic, government-mandated business closures, nationwide stay-at-home orders, and—unprecedented—disruptions to the global supply chain have illuminated, previously unknown, vulnerabilities across a whole host of industries. Would anyone have seriously questioned the viability of office space two years ago? Now, inflation, in keeping with the recent chaos, may be upending the viability of another tried-and-tested institution: the supply contract.
The U.S. Cannabis industry stands on the cusp of springing forth as a fully formed industry once certain legislative hurdles are overcome. As one of the first major U.S.-based business advisory firms to establish a cannabis-specific practice, the FTI Consulting team understands the unique challenges of the cannabis industry from local, national and global perspectives.
The world economy is experiencing the perfect storm of inflation, interest rate increases, supply chain disruption, and a potential global recession. These conditions exert pressure on trading partners who may have nowhere to turn but each other to relieve pressure. Contract parties are experiencing requests for price increases, extended payment terms, and cancellation of some or all orders. How a contract party addresses these issues depends on the business leverage between the parties and the importance of the business relationship.
On September 15, President Biden announced a tentative deal with unions representing tens of thousands of railroad workers that helped narrowly avoid a strike that threatened to devastate the country’s delicate supply chains that have been strained since the beginning of the pandemic. Now the country awaits the outcome of the union member votes (which we may not know until mid-November), but even if the members approve the deal, the retail sector will still face empty shelves, job vacancies and surging inflation.
Introduction
The Insolvency and Bankruptcy Board of India (IBBI) on 16 September 2022 promulgated the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2022 (CIRP Amendment Regulations) amending the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations).
The key amendments introduced by the CIRP Amendment Regulations are as follows:
Part 1: Preventative composition as a restructuring tool
As commercial companies in the UAE grapple with increasing inflation and interest rates, constraints to supply chains and labour market challenges, it seems inevitable that the number experiencing financial distress will rise.