Introduction

Due to the ongoing financial crisis and the economic downturn accompanied therewith, many German companies are or will be struggling with default and insolvency problems.

The November/December 2007 issue of Insolvency Notes featured an article highlighting a Manhattan-based federal bankruptcy court's refusal to officially recognize proceedings commenced in the Cayman Islands to liquidate two Bear Stearns-managed hedge funds that collapsed in June of that year.

Many participants in the multibillion-dollar distressed-debt trading markets were hoping that Federal District Court Judge Shira A. Scheindlin would permit expedited review of her ruling immunizing a purchaser of a claim against a debtor in bankruptcy from objections to the claim based upon the conduct of a prior holder of the claim.

In the September, 2006 issue of Insolvency Notes, the effect of the overhaul of the bankruptcy laws in the Czech Republic was discussed. As was the case at that time, the new insolvency laws were to become effective July 1, 2007. It now appears that the effective date will be delayed. The lower house of Czech Parliament gave fast-track approval recently to a bill for delaying implementation of the new bankruptcy act by six months, to January 1, 2008. Senate and presidential approval is still needed.

The automatic stay under the version of the UNCITRAL Model Law on Cross-Border Insolvency adopted by Singapore ("Singapore Model Law") is an accessible and powerful tool for protection under the Singapore restructuring regime for non-Singapore debtors facing enforcement action in Singapore. Non-Singapore debtors subject to restructuring or liquidation cases outside Singapore may obtain protection from creditor action in Singapore through the application of the Singapore Model Law, thereby facilitating the debtor's ability to restructure.

Recent insolvency law reforms in the UK, Singapore and Australia impact upon the ability of a party to a construction contract to terminate it due to the other party's insolvency.

Background

The Indonesian Supreme Court has provided guidance on the availability of the key restructuring process in Indonesia – the examination process of a suspension of payment or restructuring (Penundaan Kewajiban Pembayaran Utang or PKPU). The guidance comes amidst a challenging economic climate and limits the remedies available to secured creditors by preventing secured creditors from initiating a PKPU.

PKPU as a Restructuring Channel

The High Court of England & Wales considered, in respect of the delayed completion of a solar project, the appropriate end date for liquidated damages under a terminated construction contract.

It is usual and standard for a construction contract to contain a liquidated damages clause. It is also common for a termination clause to be included and it is not unusual for it to be exercised. Strangely, however, it is not clear under English law how these two concepts interact.

In its April 2018 decision, the BGH ruled on the question whether the directors of a company that has been granted debtor in possession status by the respective insolvency court can become personally liable for a breach of a duty of care vis-à-vis the creditors like an insolvency administrator. The underlying legal question was the subject of a controversial academic discussion in the past.