The Dominican Republic reforms restructuring and insolvency law

For decades, restructuring and insolvency matters in the Dominican Republic involving merchants and companies in non-regulated industries have been carried out on a “de facto” basis, due to the obsolescence of the existing legal framework and institutions. Fortunately, that is not the case anymore.

As a member of the World Trade Organization, the Dominican Republic has entered into a number of international commercial agreements and conventions, which in turn has propelled the necessity to modernise the Dominican bankruptcy legal framework in order to promote entrepreneurship, productivity, wealth creation and fair treatment among different classes of creditors. Continue Reading

Fight or Flight – Insolvency in the aviation industry

Aircraft MaintenanceAir Berlin, one of Europe’s largest airlines, filed for insolvency on 15 August 2017. The airline, which is Germany’s second-largest carrier after Lufthansa, filed following the decision by Etihad Airways to pull financial support. Etihad owns 29% of Air Berlin and had been pumping money into the struggling airline for the past 6 years.

The German government has stepped in to provide €150m in temporary credit lines backed by state guarantees to keep the airline flying. This funding is estimated to last for approximately 3 months. Air Berlin is now in the process of meeting with potential bidders however its CEO has confirmed this will be structured as an asset sale as the sale of the airline as a whole is not possible. Continue Reading

Blockchain: Banks Are Taking Back Control – Time for the Real Estate Industry to Do the Same?

In a recently published article, John Danahy, a real estate partner based in Squire Patton Boggs’ London office, explores the development of a new cryptocurrency and its impact on the worlds of finance and global real estate. Of particular relevance to restructuring and insolvency professionals is the use of so-called “blockchains” in title transfers and the impact that blockchains will have in the sale of not just real estate but financial instruments as well.

To read the article, click here.

German Supreme Court: Loan Administration and Management Fees are invalid

Kreditvertrag, Geld und ein StiftThe German Federal Supreme Court for Civil Matters (Bundesgerichtshof – BGH) held in two cases on 4 July 2017 that provisions contained in the standard contracts of banks providing for the payment of management or loan administration fees (Bearbeitungsentgelt) by the borrower is invalid under German law, irrespective of whether the borrower is a consumer or a company and irrespective of whether the borrower is a small, medium-sized or large company. Continue Reading

The Interminable ‘Insured vs. Insured’ Battle

In an article just published in the Bankruptcy Strategist, Norman Kinel and Elliot Smith explore the practical impact of the Sixth Circuit Court of Appeal’s recent decision in Indian Harbor Insurance Company v. Zucker, et al., 2017 U.S. App. LEXIS 10821, which bankruptcy practitioners – particularly those representing creditors’ committees – need to consider, because having the wrong plaintiff or the wrong mechanism in place to pursue claims against a debtor’s officers and directors could result in losing the ability to recover value for creditors.

To read the article, click here.

Other aspects of the Zucker case were previously examined by Christopher Meyer in Squire Patton Boggs’ Bankruptcy Blog.

Mutual Recognition- It takes two…..

Access DeniedUK lawyers and restructuring professionals have been highlighting their concerns for British business and Financial Markets if the Government is unable to negotiate a bespoke treaty between the UK and the EU to preserve the mutual and reciprocal recognition provisions written into the Recast EU Insolvency Regulation (Recast EIR) and the Recast Brussels Regulation (the Judgements Regulation) after Brexit in 2019.

The Recast EIR currently provides for the automatic recognition of UK insolvency appointments and proceedings in each of the other 27 Member States. The Judgments Regulation facilitates the automatic recognition and enforcement of court judgments across the EU. This applies to all types of cross-border civil and commercial judgments, including insolvency. It is particularly important for the enforcement of English schemes of arrangement (which are not insolvency proceedings and so not covered by the Recast EIR) within the EU.

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For whom the bell tolls! – Financial distress in the education sector

The Woman sat at desknew school year is upon us and once again the education sector (and particularly funding for institutions from primary school right through to further education) is in the spotlight at a time when growth continues to stagnate.

Education providers are continuing to encounter financial risk as a result of increase in investment requirements outstripping growth. These factors coupled with substantial cutbacks in government funding is creating a perfect storm for the failure of education providers and the government has tried to address the detrimental implications for students by passing legislation to deal with the insolvency of education providers. Continue Reading

Enforcing Arbitration Provisions In Bankruptcy Cases – Another Court Weighs In

Are arbitration clauses enforceable in a bankruptcy case?  Last month, the U.S. District Court for the Eastern District of Arkansas said “yes” and held that state law causes of action that arose out of alleged breaches of contract and other state law theories of liability should be arbitrated as agreed to by the parties in their pre-petition contracts rather than litigated in the bankruptcy court.  Gavilon Grain LLC v. M. Randy Rice (In re Turner Grain Merchandising, Inc.), Case No. 17-00040, D.I. 12 (E.D. Ark., August 16, 2017)

The facts of this case are straightforward.  Turner Grain Merchandising, Inc. (“Turner”) was a grain broker that, among other things, purchased corn, rice and soybeans from farmers and re-sold those commodities to third parties, including Gavilon Grain LLC (“Gavilon”).  Turner eventually encountered liquidity problems and commenced a chapter 11 proceeding to restructure its business.  However, Turner’s attempt to restructure was unsuccessful and the chapter 11 proceeding was ultimately converted to chapter 7.  M. Randy Rice was appointed the chapter 7 trustee (the “Chapter 7 Trustee”) and filed over fifty adversary proceedings seeking to recover Turner’s assets for the benefit of its many creditors.  Included was an adversary proceeding brought against Gavilon.  Continue Reading

Bank holiday bonanza – the effect of UK weather on consumer spending

The British press reported this week that packed UK beach resorts over the August bank holiday weekend enjoyed their biggest-spending tourism weekend of 2017. Some £2.5 billion is expected to have been spent as about 17 million Britons took a holiday or day trip. VisitEngland reported that around a million headed to Cornwall, with 450,000 expected to have visited Brighton over the weekend. Image result for uk sunny weather map image

We Brits have an interesting relationship with our weather! The British Retail Consortium has reported that weather is the second biggest influence on consumer behaviour after the economy. The weather affects the consumer mood, how we purchase and what we spend. Continue Reading

“Insured Versus Insured” – – Who is the Debtor-in-Possession, Anyway

In a decision rendered earlier this year by the Sixth Circuit Court of Appeals, the court examined the difference between a debtor and a debtor-in-possession in the context of the “insured verses insured” exclusion contained in a D&O liability policy.

Indian Harbor Insurance Company v. Zucker, et al, arose in connection with the bankruptcy case of Capital Bank Corp. After failing in its efforts to reorganize, Capital proposed a liquidating plan of reorganization. As a result of negotiations with its creditors committee, the plan included a provision that created a liquidating trust to pursue claims on behalf of creditors. The estate assigned various claims and causes of action to the trust.

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