The banking reform package marks an important step toward the completion of the European post-crisis regulatory reforms

In September 2008, the seismic collapse of Lehman Brothers initiated one of the largest corporate insolvencies in history. Nearly ten years later, in a landmark decision, the High Court has sanctioned the scheme proposed by the administrators of its principal European trading arm, Lehman Brothers International Europe ("LBIE").1

This article was published in a slightly different form in the November 2016 issue of Futures & Derivatives Law by The Journal on the Law of Investment & Risk Management Products.

Introduction

While fears of another downturn loom, the European financial markets have innovated, evolved and grown.

Following the collapse of Lehman Brothers and the period that followed, the markets have more understanding of the credit risk spectrum. This includes jurisdictional risk, available restructuring options and the complexity involved in any enforcement process.

Banking

On 25 October 2013 the Bank of Russia approved Regulation No. 408-P “On the Procedure for Assessing Compliance with the Requirements to Qualification and Business Reputation…”

The Regulation was registered by the Ministry of Justice on 26 December 2013.

A senior creditor can obtain significant leverage over a chapter 11 debtor if it is able to vote not only its claim but the claims of junior creditors in connection with the solicitation of a plan of reorganization. Obtaining such leverage, however, has proven problematic in the past. Among other things, courts have been reluctant to enforce pre-bankruptcy assignments or waivers of voting rights contained in intercreditor agreements, holding that such assignments or waivers may violate the Bankruptcy Code and rules. In Avondale Gateway Center Entitlement, LLC v.

Recent changes in Peruvian insolvency laws1 will now allow financial institutions and insurance company counterparties to close-out and net obligations under derivatives and repurchase agreements with Peruvian financial institutions or insurance companies which become subject to bankruptcy proceedings.

Xi Xiaoming, the deputy president of China’s Supreme People’s Court, said that the Supreme People’s Court has formally launched efforts to formulate judicial interpretations on the Enterprise Bankruptcy Law. The Court will conduct further research on several important legal issues arising from the new circumstances and problems which the courts have encountered since the introduction of the Enterprise Bankruptcy Law on 1 June 2007.

In Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Company, the Supreme Court held that federal bankruptcy law does not automatically disallow claims for post-petition attorneys' fees incurred by a prepetition unsecured creditor simply because such fees are incurred in litigating issues arising under the Bankruptcy Code. The Court, however, left open the issue whether such claims may be disallowed on the basis that the attorneys' fees were incurred post-petition.

In Motorola, Inc. v. Official Committee of Unsecured Creditors (In re Iridium Operating LLC, 478 F.3d 452 (2d Cir. 2007), the Second Circuit held that the most important factor for a bankruptcy court to consider in approving a pre-plan settlement pursuant to Bankruptcy Rule 9019 is whether the settlement’s distribution scheme complies with the Bankruptcy Code’s priority scheme. Prior to this ruling, courts in the Second Circuit generally considered the following factors when approving settlement agreements: