By Götz Hempel, TeekensKarstens advocaten notarissen
On 4th June 2015, the Dutch Minister of Security and Justice sent the legislative proposal Act on the Continuity of Companies I regarding the introduction of pre-pack sales by a proposed trustee to the House of Representatives (Tweede Kamer) for further consultations.
By Sanjeeva Narayan, Ashwani & Associates
While Greece may be leading the way in terms of restructuring of debt, corporations in India have also adapted to the fad and have been applying for restructuring left right and centre. The slowdown in the economy after 2010-11 has had a ripple impact on the fortunes of India Inc. and lenders alike. With gross domestic product (GDP) growth decelerating from 8.4 per cent in 2010-11 to the sub-five per cent level in the first three quarters of the current financial year, the number of companies seeking succour from lenders under the aegis of the corporate debt restructuring (CDR) cell had almost doubled since 2011.
By KC Chia, KC Chia & Noor
“Corporate restructuring is an effective tool to resurrect distressed companies with a view of giving them a new lease of life, therefore enabling them to positively contribute to the nation’s future social and economic development…” Many companies in an economic downturn are making losses and may find themselves in a position of insolvency, meaning that they are unable to pay their debts as and when they fall due. Being trapped in such position is precarious, as there is a risk of the company being wound up, causing undue hardship to employees, creditors and shareholders alike. In addition, creditors will rush to enforce their debts, which is usually disastrous state of affairs. This may eventually lead to the end of a company following a harsh liquidation process, which is costly, less efficient and time consuming. However, there are revival mechanisms in place to address such issues, depending on the root cause.
By Natasha M. Songonuga and Mark Conlan, Gibbons P.C.
In a May 5, 2015 decision, Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware rejected certain trade creditors’ objections to the joint motion filed by the debtors and the official committee of unsecured creditors in the ADI Liquidation, Inc. (f/k/a AWI Delaware Inc.) chapter 11 cases, jointly administered under Case No. 14-12092 (KJC), seeking authorization to offset trade credits, vendor overpayments and other amounts owed to the debtors against the creditors’ administrative and secured claims (the “Joint Motion”). In granting the Joint Motion, Judge Carey concluded that the Bankruptcy Code (including its underlying policies) and case law provide ample support for allowing the debtors to exercise their discretion in determining to first offset funds owed to the debtors against a creditor’s administrative and/or secured claim (including Bankruptcy Code section 503(b)(9) claims) before applying such setoff rights against the creditor’s general unsecured claims. See Docket No. 2052. The decision highlights the risks trade creditors face in having their administrative priority claims under section 503(b)(9) diluted by a debtor’s setoff rights.
By Mario Kapp, KAPP & STRIMITZER Rechtsanwälte GmbH
The successful and sustainable reorganisation of a company cannot be limited to the approval of a haircut by the creditors. In fact, the company must use the proper restructuring proceedings for its actions. In this regard, the Austrian Bankruptcy Act (IO) provides several substantive restructuring instruments.
By Brett Theisen, Gibbons P.C
GAAP-compliant financial statements are prepared under a presumption that the reporting entity will continue as a going concern, i.e., assets will be realised and obligations met in the ordinary course of business. The presumption lasts until an entity’s liquidation is imminent; thereafter, liquidation accounting must be used.
By Leslie A. Berkoff and Marc L. Hamroff, Moritt Hock & Hamroff LLP
A key strategy in acquiring assets from a bankruptcy estate is by utilising existing debt and liens to credit bid for the assets that may be in play. However, over the past few years the ability of secured creditors to evaluate this strategy in a case based upon the value of their lien position has been undercut by several developing areas of the law.
By Dr. Angelika Baumhof and Christian Pflaeger, Jakoby Dr. Baumhof
Do you deliver goods to Germany and want to avoid that your pecuniary claims are as good as totally lost when the customer becomes insolvent before he has paid the bill?
By Claudio Ceradini, SLT – Studi Legali e Tributari
Since 2007, Italy has been facing one of the deepest and longest financial and industrial crises ever seen. The number of bankruptcies has grown very rapidly. Consequently, the government has decided to develop restructuring rules with new options offered to those companies which detected their situation promptly and decided to react with a recovery and turnover plan.
By Higini Marsal, Grup Vilar Riba
Transactions such as CVC and Deoleo and the merger of the IDC Salud (Capio) and Quirón hospital groups have been possible thanks to the application of the covenant lite or covlite formula, a structure which, for its nature and characteristics, tends to be associated with situations in which excess cash flow and a lack of opportunities has forced lenders to relax guarantees in order to ensure profitability and the survival of their business.