Insolvency & Restructuring updates

Bahamas

Privy Council determines extraterritorial reach of clawback claims in insolvency proceedings
Lennox Paton
  • Bahamas
  • 23 August 2019

The Privy Council has determined that, notwithstanding the absence of express statutory provisions permitting service out of the jurisdiction of fraudulent preference claims, such claims are to have extraterritorial effect. This decision clarifies the law as it relates to the extraterritorial effect of fraudulent preference claims; however, it also creates difficulties for subscribers to mutual funds that may be held liable for investments made on behalf of third-party beneficiaries that are the ultimate recipients of payments.


Belgium

Government measures to assist companies during COVID-19 pandemic – interview
  • Belgium
  • 12 June 2020

Due to the lockdown measures and other restrictions imposed by the government to fight the COVID-19 pandemic, many companies are dealing with revenue losses while having the same level of (fixed) costs. In this video, Bart Heynickx, counsel at ALTIUS, discusses various insolvency issues that are arising in Belgium as a result of COVID-19.

Is my business automatically protected against creditors during COVID-19 crisis?
  • Belgium
  • 08 May 2020

Due to the lockdown measures and other restrictions imposed by the government to fight the COVID-19 pandemic, many companies are dealing with revenue losses while having the same level of (fixed) costs. Royal Decree No 15, which recently entered into force, implements new temporary measures to protect businesses that had not ceased payment before or on 18 March 2020 but found themselves in difficulty afterwards due to the COVID-19 crisis. These measures will last until 17 May 2020, unless extended.

Limits to privileged claims
  • Belgium
  • 28 February 2020

A Supreme Court judgment has clarified that new financing during reorganisation proceedings in principle results in new claims, leading to a privileged status of such claims in the framework of any subsequent liquidation. Further, it confirms that the courts require financing to be actual and new (ie, mere refinancing is insufficient).

Clawback: chasing assets
  • Belgium
  • 13 December 2019

The legal form of the actio pauliana offers options for creditors which are confronted with debtors that are disposing of important assets or organising their insolvency. This article reflects on some of the options offered under Belgian law by the actio pauliana, commonly referred to in English as the 'clawback' rules.

Effect of EU preventive restructuring directive on Belgian insolvency framework
  • Belgium
  • 18 October 2019

A number of legislative changes to Book XX of the Code of Economic Law may be required following the adoption of EU Directive 2019/1023/EU on preventive restructuring frameworks. This article focuses on the directive's potential effect on Book XX with regard to debtors in possession, the duration of moratoria, the suspension of enforcement during moratoria, the suspension and termination of ongoing contracts, the cramdown of creditors and the acceptance of reorganisation plans.


Cayman Islands

Contributed by Ogier
Commencing proceedings against a Cayman company in liquidation: having a case worth entertaining
  • Cayman Islands
  • 19 March 2021

The Grand Court recently considered the statutory moratorium against commencing proceedings against a Cayman company in liquidation. The court held that a plaintiff which launches originating proceedings against a company in liquidation, seeking adverse orders against that company, requires leave of the court to bring the proceedings. It also held that the plaintiffs in this case did not have "a case worth entertaining" in respect of either basis on which they had brought their applications.

Snapshot: compulsory liquidation
  • Cayman Islands
  • 08 January 2021

A Cayman Islands company may be wound up either voluntarily according to its articles of association or compulsorily by the Grand Court. This article provides an overview of the compulsory process in the Cayman Islands.

Snapshot: determining whether a petition debt is disputed on substantial grounds
  • Cayman Islands
  • 20 November 2020

It is trite law that where a petition debt is disputed in good faith and on substantial grounds, the Grant Court's ordinary practice is to dismiss or strike out the winding-up petition. However, this principle is more easily applied in theory than in practice, resulting in a remarkable amount of case law. That body of case law has been swelled in 2020 by a number of Grand Court decisions which provide further guidance as to whether a petition debt is to be considered genuinely disputed on substantial grounds.

Guide to restructuring and corporate recovery
  • Cayman Islands
  • 30 October 2020

This article answers FAQs on restructuring and corporate recovery options available in the Cayman Islands, with respect to domestic procedures, cross-border procedures, creditors, avoidance transactions, contributions to liquidation estates and officer liability.

Snapshot: bringing claims against Cayman entities subject to insolvency processes
  • Cayman Islands
  • 23 October 2020

To ensure the orderly and collective resolution of a company's affairs, the Companies Law imposes a moratorium on commencing or proceeding with any suit, action or other proceedings against the company once liquidators are appointed by the court (including on a provisional basis). Once these officeholders are appointed, proceedings can be commenced or proceeded with against the company in question only with the leave of the Grand Court, subject to such terms as the court may impose.


Cyprus

Contributed by AG Erotocritou LLC
Challenging past transactions in liquidation: fraudulent preference
  • Cyprus
  • 19 February 2021

An effective weapon in a liquidator's and creditor's arsenal to ensure the fair and equal treatment of all creditors of a failing company is the ability to challenge past transactions that sought to favour one creditor to the detriment of others. Transactions entered into by Cyprus companies that are being wound up may be voided if they constitute fraudulent preference and took place during the statutory claw-back period.

Legal framework on voluntary liquidation – an overview
  • Cyprus
  • 11 December 2020

Chapter 113(III) of the Companies Law is the main legal framework which regulates the voluntary liquidation procedure in Cyprus. There are two ways in which voluntary liquidation can be triggered: by members or creditors. This article provides an overview of the legal framework for voluntary liquidation by members and creditors, respectively.

Insolvency and restructuring from a COVID-19 perspective
  • Cyprus
  • 24 July 2020

In response to the COVID-19 crisis, the government introduced a series of humanitarian and financial measures, with the latter covering insolvency and restructuring matters. Although the measures could provide much-needed breathing space for companies, they might not solve problems that existed prior to the crisis.

Examinership: protecting businesses during and after COVID-19 pandemic
  • Cyprus
  • 24 April 2020

Although it is a relatively unknown procedure, examinership may hold the key to the survival of businesses dealing with the financial consequences of the COVID-19 pandemic. Examinership can protect a business from any claims advanced against it in the short term and offer assistance in the form of an insolvency practitioner, who can devise a restructuring plan to safeguard the business's long-term survival.

Winding-up petitions: locus standi for oppressed minority shareholders
  • Cyprus
  • 06 March 2020

The Limassol District Court recently ruled that minority shareholders may file an oppression of minority petition irrespective of whether the underlying company had a positive value for making distributions to shareholders in the event of a winding up. Although this first-instance judgment carries no precedential value, it nevertheless sets the record straight with regard to petitioners' locus standi to promote oppression of minority petitions in the event of a winding up.


Finland

New statute amends Bankruptcy Act
  • Finland
  • 16 August 2019

The Bankruptcy Act has been amended by a statute which came into force on 1 July 2019. The amendments aim to simplify and accelerate bankruptcy proceedings. This article focuses on amendments that affect the position of creditors located outside Finland, such as those concerning the lodgement of claims, dates of creditors' meetings and the bankruptcy and restructuring proceedings case management system.

Bankruptcy estate liability for mutual real estate company's maintenance charges
  • Finland
  • 19 April 2019

The Eastern Finland Court of Appeal recently ruled on a bankruptcy estate's liability for a mutual real estate company's maintenance charges. This decision further defines the scope of bankruptcy estates' liabilities and is a logical continuation of Supreme Court precedent in this area. As payments of bankruptcy estates' administrative expenses are privileged compared with claims against debtors, the definition of 'administrative expenses' should be interpreted cautiously.