To date, EU-wide insolvency legislation has focused on resolving conflicts of laws issues between Member States. Now that the Preventive Restructuring Framework Directive (the "Directive")¹ has successfully navigated its way through the Council and European Parliament (albeit with some significant amendments to the original text), all of that is set to change.

1. Nature of process 

Chapter 11 used to effect operational restructuring, deleverage balance sheet, and/or commence asset sale of the business as a going concern

Insolvency Act process primarily used to effect a pre-packaged sale of the business or assets effected by administrators (i.e. external qualified appointees).

In brief

In recent years, it has become common practice in large chapter 11 cases for debtors to include language in their proposed chapter 11 plan which purports to release certain nondebtors from the claims of third parties. Although some third parties may consent to the release—such as by voting in favor of the plan or otherwise electing to do so during the plan solicitation process—circumstances frequently arise in which the debtors seek approval from the bankruptcy court to release nondebtors from third parties’ claims without the consent of the third parties.

This panel discussion at INSOL London 2022, moderated by Debra Dandeneau, Chair of the Global Restructuring & Insolvency Group at Baker McKenzie, explored how rescue financing works in different parts of the globe and provided insights on some issues that alternative capital providers typically face. The panellists also brought a wide variety of experience and views to creating an ideal system that promotes restructuring and rescue financing.

Some of the key takeaways and insights were:

The US Supreme Court has reversed the First Circuit's ruling in Mission Products (Mission Prod. Holdings v. Tempnology, LLC (In re Tempnology, LLC), 879 F.3d 389 (1st Cir. 2018)), thereby allowing the trademark licensee in that case to continue using the licensed trademark despite the debtor trademark licensor's rejection of the underlying trademark agreement in its bankruptcy case.

In this week’s TGIF, we consider the dangers of being the last one standing in ‘mothership’ preference claims. In the recent decision of In the matter of Bias Boating Pty Limited (receivers and managers appointed) (in liquidation) [2019] NSWSC 47, Black J ordered costs against a number of defendants to a preliminary question of insolvency even though they did not participate in the hearing of that question.

This week’s TGIF considers Re Legend International Holdings Inc (In liq) [2018] VSC 789, the next chapter in the story of Legend International Holdings Inc, where the Court found a company to be insolvent on the basis of a foreign debt.

Amortisation of assets is the decrease in value of those assets over a period of time. Amortisation of loans is the process of paying off a debt over time through regular payments.

Bankruptcy

An insolvency procedure which relates to a natural person as opposed to a company.

Bond

An interest bearing security issued by governments and companies as an alternative way to raise capital which can be traded on the open market.

Capital Structure

The composition of a company's mixture of debt and equity funding.

Credit Bid

This week’s TGIF considers Legend International Holdings Inc (In Liquidation) v Indian Farmers Fertiliser Cooperative Ltd & Kisan International Trading FZE [2016] VSCA 151 in which it was held that s 581 does not prohibit a winding up order where Chapter 11 proceedings are on foot.

What happened?