Forum bias, along with some technical issues, are still challenges in cross-border insolvencies in Australia

Just over ten years ago, Lehman Brothers filed for bankruptcy in the US, which turned out to be one of the largest cross-border insolvency cases in history.

Last year also marks:

A recent Full Court decision is a win for directors who hold D&O insurance policies, as well as those seeking to bring proceedings against directors of an insolvent company – probably to the dismay of insurers.

High Court orders the liquidation of CBL Insurance

The highly anticipated Supreme Court decision in Bresco Electrical Services Ltd (in Liquidation) v Michael J Lonsdale [2020] UKSC 25 has endorsed the use of adjudication in the context of insolvency set off, substantially reversing the decision of the Court of Appeal.

The Corporations Act 2001 sets out a regime for the order in which certain debts and claims are to be paid in priority to unsecured creditors.

That's straightforward enough for a liquidator, right?

Unfortunately, matters are not that straightforward. In effect, there are two priority regimes under the Act for the preferential payments of particular creditors, each of which applies to a different "fund", and we've observed this has led to some liquidators being unsure of how to proceed – or even worse, using funds they should not.

In Short

The Situation: On August 11, 2020, a Credit Derivatives Determinations Committee for EMEA ("DC") unanimously determined that the Chapter 15 filing by British retailer Matalan triggered a Bankruptcy Credit Event under standard credit default swaps ("CDS").

The Result: The DC's decision diverged from its only prior decision (involving Thomas Cook) on whether a Chapter 15 petition constituted a Bankruptcy Credit Event.

The Corporate Insolvency and Governance Act 2020 (“the Act”) came into force on 25 June 2020 making sweeping changes to the current insolvency legislative framework. This article will focus on Section 14 of the Act and its effect on suppliers of insolvent companies. These provisions had been in consideration for some time before the pandemic. They are permanent provisions unlike some other provisions in the Act which appear to have been brought in on a temporary basis as part of the government’s support package for businesses.

The effect of Section 14

Since Richard Branson’s Virgin Atlantic Airways Ltd’s request for Government loan was denied (see the post by my colleague, Jess), the airline has announced plans for a private-only solvent recapitalisation to "rebuild its balance sheet" and "welcome passengers back".

The ongoing pandemic will cause upheaval across all markets and sectors. Business models may become unviable. Sound businesses will suffer short-term liquidity crises. Customer behaviour may alter. Distress opportunities can create opportunity if buyers can work to an accelerated timeline.

1. IT'S NOT JUST INSOLVENCY

Assuming the Pizza Express company voluntary arrangement (CVA) follows the approach taken by other casual diners and retailers who have also launched CVAs recently, we can predict with some confidence what the Pizza Express CVA proposal might say.