On 18 December 2018 the English Court of Appeal held in the case of OJSC International Bank of Azerbaijan that the rule in Gibbs is still a fundamental tenet of English insolvency law and not to be sidestepped by the Cross-Border Insolvency Regulations.

Facts

The facts in summary are these:

In a decision widely anticipated by investors in emerging market and distressed debt, the Court of Appeal has upheld the decision of the High Court to refuse to grant an indefinite moratorium on claims under certain English law debts under the Cross Border Insolvency Rules (“CBIR”). In doing so, the Court of Appeal has reaffirmed a long-standing principle of English common law that provides important protection to creditors; known as the Rule in Gibbs, the rule provides that a debt may only be discharged according to its own governing law.

Are CVAs on the rise?

News of famous high street names, particularly in retail, and the restaurant sector entering into CVAs is commonplace. Government Insolvency Service figures record 102 CVAs in the first quarter of 2018, an increase of 18%. Whilst the retail sector is undoubtedly feeling the pinch, CVAs are potentially open to any company. The impact on the owners of property occupied by such businesses, can be significant and highly prejudicial.

What exactly are CVAs?

Introduction

The Court of Justice of the European Union (CJEU) has ruled today that the Pension Protection Fund regime does not satisfy European law requirements. The judgment is likely to have a significant impact on the PPF, and could have wider knock-on effects for many occupational pension schemes.

Background to the case

On 13 September 2018, the UK Government published a guidance notice (Guidance) on handling civil disputes, including cross-border insolvencies, in the event that the UK exits the EU without having first agreed a framework for ongoing civil judicial cooperation, and from which time and date (11 pm on 29 March 2019) the UK will not benefit from the EU rules to replace the current arrangements.

Introduction Following recent proposed changes to UK restructuring and insolvency law, a new European Union (“EU”) directive concerning restructuring within EU Member States proposed by the European Commission (“Commission”) has reached an advanced stage.

English law restructuring and insolvency tools are used to implement financial restructurings and the external administration of foreign companies. The attractiveness of the English tools and legal system is highlighted by the prevalence of companies incorporated abroad, especially companies incorporated in the EU, which avail themselves of those tools. English law in this area is impacted by much European law.

KEY POINTS Investors seek reliable information, legal certainty, predictability of outcome and the

opportunity to participate in a rescue and/or restructuring which will recover value. The Recast European Insolvency Regulation (the `Recast EIR') should, at least in part,

help investors meet those objectives. It is hoped that the Recast EIR will encourage greater investment (including distressed

English Law Challenges to EU Bank Restructurings Firmly Closed off by U.K. Supreme Court

Summary – Decision of U.K. Supreme Court