Cross Border Insolvency Bulletin - November 2018

Bankrupt's COMI: Deutsche Apotheker-Und Arztebank EG v Dr Ralph Rainer Leitzbach & Others

A discharged Bankrupt had intentionally misled the Court as to his COMI being in England and Wales in order to obtain a Bankruptcy Order. Four years after the making of the Bankruptcy Order, the Court annulled it on the grounds that the Court did not have jurisdiction to make the Order in the first place. 

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(1) RUSSELL CRUMPLER (2) SARAH BOWER (Joint Liquidators of PEAK HOTELS & RESORTS LTD in Liquidation) v CANDEY LTD (2018)

The joint liquidators of Peak Hotels & Resorts Limited ("Peak") brought an unsuccessful appeal that a legal charge held over funds paid into court ("Funds") was incapable of enforcement. The court dismissed the appeal on the basis that Peak did retain a proprietary interest over the funds.

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Singapore Insolvency, Restructuring and Dissolution Bill passed 

On 1 October 2018, The Insolvency, Restructuring and Dissolution Bill was passed in Singapore. 

This will consolidate personal and corporate insolvency laws into the Insolvency, Restructuring and Dissolution Act, with the Bankruptcy Act to be repealed and the relevant corporate insolvency provisions in the Companies Act being removed. 

Provisions introduced by the Act will include allowing a company to be placed under judicial management by obtaining a resolution of the majority of its creditors, rather than needing court approval. 

The Act will also allow judicial managers and liquidators to assign the proceeds of actions in  relation to:

• transactions at an undervalue

• unfair preferences

• extortionate credit transactions

• fraudulent and wrongful trading, and

• delinquent officers facilitating third-party funding

In addition, the Act allows courts to declare that any person who was a knowing party to a company's wrongful trading is personally responsible for its debts or liabilities before criminal liability is established, whereas under the current legislation, company officers must be found criminally liable before any application for a civil remedy can be made.

Gourmet Burger Kitchen enter into CVA

Gourmet Burger Kitchen have announced plans to close 17 of its 85 restaurants in the UK through a company voluntary arrangement (CVA), impacting approximately 250 staff. 

GBK, owned by South Africa's Famous Brands, operates more than 80 stores and employs 2,000 people.

Creditors voted in favour of the proposed closures at a meeting on November 9. All restaurants will continue trading in the meantime. The potential closures will impact 250 jobs but the company has reassured that “every effort will be made” to redeploy staff should they choose. The closures will leave the company with a 68-site portfolio.

Darren Hele, Famous Brands CEO, said: “The CVA is designed to promote GBK’s long-term financial viability and sustainability. In this regard, the goal will be to reach binding agreements or compromise with GBK’s unsecured creditors, which could potentially enable GBK to exit underperforming sites and achieve rental reductions on others, thereby improving the health and profitability of the portfolio and general financial performance of the business.”

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