uk corporate insolvency law recent developments in light of the global financial crisis
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UK Corporate Insolvency Law Recent Developments in Light of the Global Financial Crisis. Dr Michael Schillig School of Law King’s College London. 1. Overview. Cork Report, 1982; Insolvency Act 1986; Enterprise Act 2002 Administration Company Voluntary Arrangement Scheme of Arrangement - PowerPoint PPT PresentationTRANSCRIPT
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UK Corporate Insolvency UK Corporate Insolvency Law Law
Recent Developments in Recent Developments in Light of the Global Light of the Global
Financial CrisisFinancial Crisis
Dr Michael SchilligDr Michael SchilligSchool of LawSchool of Law
King’s College LondonKing’s College London
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OverviewOverview
Cork Report, 1982; Insolvency Act 1986; Enterprise Act 2002
Administration Company Voluntary Arrangement Scheme of Arrangement Voluntary winding up by the creditors Compulsory winding up by the court
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OverviewOverview
Recent DevelopmentsRecent Developments
Pre-packaged administrations in the European context
The UNCITRAL Model Law in action The anti-deprivation rule under scrutiny
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Destination pre-packDestination pre-pack
Pre-pack administrationPre-pack administration
Pre-arranged sale of the business Pre-arranged sale of the business immediately on appointment of the immediately on appointment of the administratoradministrator
Prior approval by creditors’ meeting or Prior approval by creditors’ meeting or leave of the court is not requiredleave of the court is not required
Only ex post facto challenge by creditorsOnly ex post facto challenge by creditors
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Destination pre-packDestination pre-pack
European Insolvency RegulationEuropean Insolvency Regulation
Centre of main interestsCentre of main interests Presumption in favour of the registered Presumption in favour of the registered
officeoffice EurofoodEurofood: rebuttable by objective criteria : rebuttable by objective criteria
ascertainable by third partiesascertainable by third parties
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Destination pre-packDestination pre-pack
Wind Hellas restructuring
Wind Hellas owned by Hellas II registered Wind Hellas owned by Hellas II registered in Luxembourgin Luxembourg
Hellas II moves COMI to EnglandHellas II moves COMI to England Administrator sells the shares in Wind Administrator sells the shares in Wind
Hellas to Weather FinanceHellas to Weather Finance 1.4 billion EUR of junior (unsecured) notes 1.4 billion EUR of junior (unsecured) notes
remain with Hellas IIremain with Hellas II
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The UNCITRAL Model Law in ActionThe UNCITRAL Model Law in Action
Cross-Border Insolvency Regulations 2006
‘foreign representative’ may apply for recognition
as ‘foreign proceeding’ which will be a ‘foreign main proceeding’ if COMI is situated in the state of that
proceeding
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The UNCITRAL Model Law in ActionThe UNCITRAL Model Law in Action
Re Stanford Bank Ltd (in receivership)Re Stanford Bank Ltd (in receivership) [2010] WL 605796 (CA)[2010] WL 605796 (CA)
US receivership: did not qualify as ‘foreign US receivership: did not qualify as ‘foreign proceeding’proceeding’
Antiguan liquidation: did qualify as ‘foreign Antiguan liquidation: did qualify as ‘foreign proceeding’proceeding’
DoJ/SFO restraint orderDoJ/SFO restraint order
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The UNCITRAL Model Law in actionThe UNCITRAL Model Law in action
Re Stanford Bank Ltd (in receivership)Re Stanford Bank Ltd (in receivership) [2010] WL 605796 (CA)[2010] WL 605796 (CA)
Pursuant to the Pursuant to the EurofoodEurofood test, SIB’s COMI test, SIB’s COMI was in Antiguawas in Antigua
Administrative priority for DoJ/SFO as this Administrative priority for DoJ/SFO as this would save costswould save costs
Recognition as foreign main proceeding Recognition as foreign main proceeding subject to restraint ordersubject to restraint order
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Anti-deprivation under scrutinyAnti-deprivation under scrutiny
Pari passu principle and anti-deprivation rule
All unsecured creditors share the assets on a pro rata basis.
It is not possible to contract out of the Insolvency Act 1986.
An interest may be limited so that it comes to an end when the company goes into winding up.
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Anti-deprivation under scrutinyAnti-deprivation under scrutiny
Perpetual v BNY [2009] EWCA Civ 1160
N
I
LBSF
BNY
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Anti-deprivation under scrutinyAnti-deprivation under scrutiny
Perpetual v BNY [2009] EWCA Civ 1160 ‘flip’ from swap counter party priority
to noteholder priority LBSF’s charge has been subject to the
‘flip’ from the start Anti-deprivation rule does not apply But: LBSF v BNY, Bkrtcy SDNY 2010:
‘flip’ as unenforceable ipso facto clause
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ConclusionConclusion
Overall well equippedOverall well equipped Emphasis on party autonomyEmphasis on party autonomy UNCITRAL Model Law as effective toolUNCITRAL Model Law as effective tool Concerns about pre-packs: race to the Concerns about pre-packs: race to the
bottom? bottom?