On August 4, 2017, the Third Circuit Court of Appeals issued its ruling in Varela v. AE Liquidation, Inc. (In re AE Liquidation, Inc.), 2017 U.S. App. LEXIS 14359 (3d Cir. 2017), holding that WARN Act liability is triggered only when a mass layoff becomes probable – “that is, when the objective facts reflect that the layoff was more likely than not.” In doing so, the Third Circuit joined the Fifth, Sixth, Seventh, Eighth and Tenth Circuits, which have unanimously adopted this heighted standard as well.
Before Polish insolvency law was significantly amended in January 2016, restructurings were extremely rare, with corporate insolvencies ending in liquidation in more than 90% of all cases. At that point, the number of insolvencies ending in the liquidation of the debtor’s assets significantly exceeded successful restructurings – the focus had been mainly on satisfying the creditors – and allowing the debtor to continue his business was not a major priority for the legislator and the courts. The reasoning behind the reform, therefore, was to revive the largely dormant restructuring regulations and encourage a more debtor-friendly application.
As part of this major reform, the whole area of corporate restructuring was moved to a separate statute, leaving the existing law focusing exclusively on insolvency issues. The new Restructuring Law now offers a debtor four different ways of coming to an arrangement with creditors, with the purpose of giving his business a chance to survive the insolvency. Depending on his situation the debtor can choose the most appropriate restructuring procedure best suiting his situation. Continue Reading
Although figures revealed last year indicated that the number of pub closures had fallen, more recent data suggests that the restaurant sector is now at greater risk of insolvency due to Brexit. This is due to rising costs which has resulted in the stagnation of disposable income (accountants Moore Stephens, for example, warned of this at the end of last year). The pub sector is certainly not out of the woods yet either: CAMRA called this week for new business rate relief to assist pubs (see CAMRA press release).
Against this backdrop, Insolvency Practitioners (IPs) would be well advised to keep up-to-date with some recent changes to licensing laws, which may impact upon how they deal with the insolvency of a business licensed for the sale/supply of alcohol, regulated entertainment (including music, dance, films, plays, boxing and indoor sports) and/or late night refreshment (hot food/hot drink after 11pm or before 5am). Continue Reading
Do a lessee’s possessory interests in real property survive a “free and clear” sale of the property under section 363 of the Bankruptcy Code? In a recent decision, the Ninth Circuit Court of Appeals said “no,” holding that section 365(h) did not protect the interest of the lessee in the context of a section 363 sale when there had been no prior formal rejection of the lease under section 365. In so holding, the Ninth Circuit joined the Seventh Circuit Court of Appeals in rejecting the majority view that a sale of real property under 363(f) does not extinguish leasehold interests in that property. The Ninth Circuit’s decision undermines the notion that lessees enjoy special protections under the Bankruptcy Code and underscores the need for lessees to be proactive in protecting their interests when their lessors file bankruptcy. Continue Reading
In the recent case of Cherkasov & others v Olegovich  EWHC 756 (Ch) the English courts considered the public policy exception set out in Article 6 Cross Border Insolvency Regulations 2006 (CBIR) and whether security for costs could be ordered against the official receiver of a Russian company (who had obtained recognition in England under CIBR) when he applied for an order for the production of evidence by some of the former managers of a Russian company under section 236 of the Insolvency Act 1986 (IA).
On 13 July, the Insolvency Service published its annual review of personal insolvency statistics for England & Wales for the 2016 calendar year. That annual review can be accessed here. This blog discusses some of the key findings contained within that report. Continue Reading
Late last month, the Supreme Court granted a petition for certiorari review of the Fourth Circuit Court of Appeals’ decision in PEM Entities LLC v. Eric M. Levin & Howard Shareff. At issue in PEM Entities is whether a debt claim held by existing equity investors should be recharacterized as equity. The Supreme Court is now poised to resolve a split among the federal circuits concerning whether federal or state law should govern debt recharacterization claims. The Court’s decision may have a significant impact on the likelihood of so-called rescue loans extended by existing equity. Continue Reading
Paul Muscutt and Cathryn Williams, of the Squire Patton Boggs Restructuring & Insolvency team in London, analyse the current restructuring market with Blair Nimmo, UK Head of Restructuring, KPMG.
On 1 July 2017 a new amendment to the Czech Insolvency Act came into force. One of the most significant changes introduced by the amendment relates to the assessment of insolvency of the debtor, performed by means of the cash-flow insolvency test.
Under Czech law, the debtor is insolvent if it has several creditors, due and payable debts for more than 30 days, and it is not able to fulfill them.
However, the amendment introduces a presumption that the debtor is able to fulfill its due and payable debts where there is a so called “coverage gap”. The coverage gap is established if the debtor is able to prove that the difference between its due and payable debts and available funds is less than a tenth of its due and payable debts, or the coverage gap will decrease below a tenth of its due and payable debts during an eight-week period (12 weeks in exceptional cases). Continue Reading