Insolvency and Restructuring International - November 2016

Insolvency and Restructuring International articles for the November 2016 issue are now available online to members of the IBA Insolvency Section. To access the articles in this issue, you will need to sign in using your IBA username and password. Access login details.


 

A word from the Section Co-Chairs
Gregor Baer and Brigitte Umbach-Spahn

Robert Stephenson Smyth Baden-Powell, 1st Baron Baden-Powell, the founder of Scouting, imparted two pieces of advice to future generations of leaders: ‘leave this world a little better than you found it,’ and, remember that ‘the most worth-while thing is to try to put happiness into the lives of others.’ With the approaching new year bringing leadership succession onto the global stage and at the IBA, Lord Baden-Powell’s maxims serve as guideposts for reflection on the closing chapter and bring illumination of the path forward.

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Co-Editors’ note
Elisabetta Caccavella and Samantha J Rothman

We are pleased to present you with this issue of Insolvency and Restructuring International. In this issue, multijurisdictional insolvencies are examined from the US, the UK, the Cayman Islands, the British Virgin Islands and Hong Kong by Randall Arthur, Rebecca Hume and Alexander Heylin. A recent decision in the US is further discussed and examined by Jeffrey R Gleit and Nathaniel R B Koslof, for a varied perspective on cross-border insolvency. Restructuring in Germany is becoming more attractive, and the benefits are discussed and explained by Steffen Schneider. In Russia, recent reforms were enacted in July 2016. The practical application of these reforms, including publication and expense obligations is detailed by Sergey Treshchev and Elena Malevich.

Finally, the new Insolvency and Bankruptcy Code of India is discussed in detail. H Jayesh and Aditi Bagri address ten key aspects of the new law including its applicability and the changes to rights/actions that can be undertaken by lenders, borrowers, and investors. Abhishek Saxena and Akshay Sachthey further address India’s new Insolvency and Bankruptcy Code in detail, including its intricacies and the background leading up to its adoption. It has been a pleasure and honour to serve as Co- Editors of IRI. We extend a warm thank you to all of our colleagues and readers who have contributed content. We both look forward to our new roles with the IBA Insolvency Section and to many more great editions of IRI.

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Navigating the seas of multijurisdictional insolvencies to charter a route to successful recoveries
Randall Arthur, Rebecca Hume and Alexander Heylin

This article examines how insolvency regimes adopted by different countries can have an effect on the ability of a foreign office holder to realise assets during a multi-jurisdictional insolvency. It focuses in particular on the US, the UK, offshore jurisdictions such as the Cayman Islands, the British Virgin Islands and Hong Kong.

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The buzz on 5 bis: US court recognises foreign proceeding despite minimal court supervision
Jeffrey R Gleit and Nathaniel R B Koslof

Under Chapter 15 of the Bankruptcy Code, a debtor in a foreign bankruptcy proceeding may apply for ‘recognition’ of such proceeding in US courts which, if granted, will effectively stay all creditor collection activity within the United States. Given the significant impact of recognition on domestic creditors, chapter 15 delineates certain statutory requirements that must be met in order for a foreign proceeding to be deemed worthy of recognition including that the proceedings: (1) must be collective in nature; and (2) must have sufficient court supervision. Recently, however, the United States Bankruptcy Court for the District of Delaware seemed to relax these requirements. In an ongoing chapter 11 case captioned In re Abengoa, SA, et al, the Delaware Bankruptcy Court granted a petition to recognise a Spanish preinsolvency action despite the proceeding lacking certain characteristics typically required for chapter 15 recognition. As a result, certain US sureties (and other US lenders) were stayed from pursuing their own collection actions and forced to accept a scheme that had been developed without their participation and was already well underway. In the wake of the Abengoa decision, US creditors should be aware that foreign pre-insolvency actions may gain recognition by the Bankruptcy Courts even if such actions lack the characteristics and formalities traditionally expected for chapter 15 recognition.

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Is Germany about to become the most attractive place for business restructurings?
Steffen Schneider

When the German legislator introduced the latest reform of its insolvency law, the Insolvenzordnung (German Insolvency Act), in 2012 (Gesetz zur weiteren Erleichterung der Sanierung von Unternehmen – ESUG) the motive behind the reform was crystal clear. The second sentence of the legislator’s official reasoning states: ‘In the past some companies have relocated their place of business to the UK because the opening of insolvency proceedings under UK law seemed advantageous to the management and relevant creditors for the restructuring of the company.’

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Russia: Unified federal register of data on bankruptcy
Sergey Treshchev and Elena Malevich

In June and July 2016, several important amendments (the ‘Amendments’) to the Federal Law No 127-FZ of 26 October 2002 ‘On Insolvency (Bankruptcy)’ (the ‘Insolvency Law’) entered into effect in Russia. According to the Amendments, only after the preliminary payment has been done can information on insolvency proceedings be included into the Unified Federal Register of Data on Bankruptcy (the ‘Register’) and published in an official mass media publication, which at the moment is the Russian business newspaper Kommersant.

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India’s new bankruptcy law: ten things you need to know
H Jayesh and Aditi Bagri

This article covers ten key aspects of the new Insolvency and Bankruptcy Code of India, its applicability and, briefly, the changes to rights/actions that can be undertaken by lenders/ borrowers/investors alike.

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The Insolvency and Bankruptcy Code, 2016 – a fresh start for India’s insolvency regime
Abhishek Saxena and Akshay Sachthey

The Indian Parliament recently paved the way for a new legal framework governing insolvency of corporates and individuals: the Insolvency and Bankruptcy Code, 2016 (the ‘Code’). The Code provides an entirely new legal regime, both substantive and procedural, to deal with insolvency and bankruptcy proceedings. While the Code has been passed by both Houses of Parliament and received presidential assent in May 2016, its provisions are yet to be brought into effect by the Government of India (GoI). Even so, the Code has become a talking point in commercial and legal circles. This article briefly touches upon the existing regime and highlights the key provisions of the Code dealing with corporate insolvency.

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Asset segregation and investor protection in the event of insolvency
ESMA roundtable, 14 September 2016

The recent European Securities and Markets Authority (ESMA) roundtable, entitled ‘Asset segregation and investor protection in the event of insolvency’, was held at ESMA’s headquarters in Paris. At the event the IBA Insolvency Section was represented by Patrick Cook, partner at Burges Salmon, and Dr Matteo Bazzani, partner at Mazzoni Regoli Cariello Pagni Studio Legale. Both were part of a panel of experts invited to provide their views and inputs on the insolvency-related aspects of asset segregation and protection of investors with assets being held by any of the custody intermediaries involved in the custody chain (depositary, delegate, sub-delegate – including prime broker – central securities depository). Representatives from the securities market regulators and supervisory authorities of the EU Member States also attended the discussion.

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