Schemes of arrangement have advantages over other insolvency procedures. For example, they offer a flexible, operational, creative and simple mechanism for restructuring debt and allow companies in financial distress to continue as going concerns. Recent statutory amendments have reduced the required statutory threshold for approving a scheme of arrangement and eliminated the requirement to secure a special majority of 75% in both value and the number of creditors present and voting.
The Insolvency Act provides insolvency administrators with an abundance of tools to challenge any actions committed by a debtor during a crucial period prior to the opening of insolvency proceedings. Two recent Supreme Court decisions summarise the existing judicature and further clarify the elements of avoidance due to preferential treatment.
The former Bankruptcy Statute of 1997 included a principle that a natural person could be discharged of their remaining and outstanding debts – a so-called 'waiver' – at the moment of a bankruptcy's closure. The discharge's beneficial effects were extended to the bankrupt person's spouse. However, for bankruptcies that have happened since 1 May 2018, and so fall under the new legal framework, this situation has changed.
In January 2015 two Supreme Court precedents indicated that assets subject to floating charges should be valued at their feasible liquidation value; however, under these precedents, the valuation terms were somewhat ambiguous and certain liquidation costs remained undetermined. The court's latest precedent addresses the equal treatment of creditors in both restructuring and bankruptcy proceedings and clearly improves the predictability of floating charges as securities in the former.
The much-anticipated Insolvency, Restructuring and Dissolution Bill was recently passed. The bill aims to ensure that Singapore's restructuring and insolvency laws remain relevant and progressive to support its position as a global restructuring hub. The bill also represents the last phase of implementing recommendations from the Insolvency Law Review Committee and the Committee to Strengthen Singapore as an International Centre for Debt Restructuring.
The government recently announced that it will legislate to update the restructuring and insolvency systems, with the aim of the United Kingdom retaining the gold-standard regime. The reforms are a response to international developments (with countries such as Spain and the Netherlands recently introducing updated insolvency systems) and some domestic corporate collapses which have put the UK system under stress.
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The Communique on the Procedures and Principles regarding the Application of Article 376 of the Commercial Code recently came into force. It determines the procedures and principles that will apply to certain companies (ie, joint stock companies, limited liability companies and limited partnerships whose capital is divided into shares) in cases of capital loss and insolvency.
Before the most recent update to the online FAQ section by the responsible authority, the question of whether Beneficial Ownership Register Act compliance is an insolvency administrator's duty was unclear. Due to the tight timeframes for complying with the act and the range of practical problems arising from it, the question has caused headaches for insolvency law practitioners in Austria.
The Singapore High Court recently delivered a landmark decision on the question of public policy under the United Nations Commission on International Trade Law Model Law on Cross-Border Insolvency, as adopted by Singapore in the Tenth Schedule to the Companies Act (the Singapore Model Law). This is the first reported decision in which a Singapore court has been faced with the question of public policy in an application for recognition of a foreign insolvency proceeding.
The Court of Appeal recently considered the test for appointing liquidators to a company following an alleged loss of substratum. The case provides insight on the principles of loss of substratum, particularly in a case where a company's object is not prescribed by its memorandum and articles of association.
The legislature recently took steps to improve the follow-up monitoring of companies in financial difficulty and strengthen the fight against inactive companies. To determine whether companies are in financial difficulty, the courts gather information from various (digital) sources. However, the focus remains on preventive mechanisms – namely, identifying companies in financial difficulty and following up with court action.
In separate but related proceedings, the BVI courts have permitted an applicant to inspect documentation relating to the liquidation of certain BVI companies. The decisions solidify the open justice policy and highlight the importance of allowing beneficiaries to oversee trustees' activities in order to ensure that the trust property is properly managed and that trustees can be held to account accordingly.
Bankruptcy agreements are governed by Articles 124 to 141 of the Bankruptcy Law and aim to speed up bankruptcy proceedings. When a bankruptcy agreement proposal is filed with the bankruptcy court, the delegated judge seeks the receiver's opinion and the approval of the creditors' committee. For a proposal to be approved, it must obtain a favourable vote of a majority of the creditors admitted to vote by Article 127 of the law.
Unlike Chapter 7 liquidations and Chapter 11 reorganisations, cases filed under Chapter 15 of the Bankruptcy Code are ancillary – essentially functioning in aid of recognised foreign insolvency proceedings. This article considers the discovery tools available to foreign representatives under Chapter 15 and two key issues relating to Chapter 15 discovery: seal-and-gag orders and the recent decision in Platinum Partners.
As a jurisdiction, Jersey is at the heart of cross-border insolvency and restructuring. Inevitably, situations arise where insolvent companies' assets or important evidence are located overseas, or an overseas liquidation regime would be best for creditors. Conversely, there will be situations where a foreign insolvency process requires steps to be taken in Jersey.
In March 2018 the Swiss Parliament adopted revisions to the international insolvency provisions of the Private International Law Act which aimed to simplify the country's insolvency and restructuring regime. Under the new rules, courts will be able to authorise transfers of assets located in Switzerland without initiating ancillary bankruptcy proceedings. The newly enacted provisions are likely to enter into force on 1 January 2019.
The Belgian insolvency law's scope was recently broadened. As of 1 May 2018, all entities that are involved in commercial or entrepreneurial activities can be declared bankrupt (or enter into court-supervised reorganisation proceedings). Discussion has started about whether company administrators can also be seen as being 'involved in an entrepreneurial activity' and thus declared bankrupt.
Generally, Finnish insolvency legislation has been stable and proven effective over the past decade. However, owing to technological advancements and recent bankruptcies involving businesses affecting the environment, there is a growing need to fine-tune bankruptcy proceedings and environmental liabilities in bankruptcies. After two years of research, an expert group established by the Ministry of Justice has published a report on these issues.
The Law amending the Enforcement and Bankruptcy Law and Other Laws recently came into force. The most significant amendments introduced to the Enforcement and Bankruptcy Law are the abrogation of the postponement of bankruptcy procedure and the adoption of a more efficient and functional structure for the composition with creditors procedure, which is a court-approved agreement between debtors and creditors.