Cross Border Restructuring and Insolvency Update - 20 December 2017

In Re Dalnyaya Step LLC (In Liquidation) [2017] EWHC 3153 (Ch)

It has been held that full and frank disclosure was not provided to the Court by a Russian Liquidator in granting a Recognition Order in the UK, which resulted in the Recognition Order being set aside. The issue was determined despite the parties being in agreement that the Liquidator's claims should be withdrawn.

Click here to read more

Algeco Scotsman PIK SA [2017] EWHC 2236 (Ch)

The High Court considered whether it would be appropriate to approve a scheme of arrangement for a company incorporated in Luxembourg where the company's COMI had been moved to England and there had been a change in the governing law and jurisdiction clause in favour of the English courts.

Click here to read more

Short stories

Financial Industries of Sweden and Denmark Criticize the Basel Committee on Banking Supervision’s Framework

The Basel Committee has completed a capital framework intended as a response to the 2008 financial crisis. The Committee announced that the agreement includes new curbs on how banks estimate the risk of mortgages, loans and other assets on their books in an effort to improve the transparency and health of lenders’ balance sheets.

Scandinavia’s financial industry has argued that the rules will hit banks unduly harshly by failing to take into account their low default histories. In Scandinavia, lenders have typically relied on their own internal models to determine how risky their assets are and how much capital they need to hold.

Sweden’s Financial Supervisory Authority will “wait for new EU regulations before we can decide on new requirements,” said Director Erik Thedeen. Moreover, Sweden’s financial regulator said it won’t automatically start raising banks’ capital standards based on the Basel Committee’s completed framework.

Chapter 15 Filing, USA: Excelco NV

A Belgian diamond and precious metals trader, Exelco NV, has filed a voluntary petition under Chapter 15 in the Bankruptcy Court for the District of Delaware (Case No. 17-12409). Exelco North America, Inc., along with three other American affiliates of Exelco NV, previously filed for Chapter 11 on September 27, 2017 (Lead Case No. 17-12029).

According to the Declaration of the Foreign Representative, a Bankruptcy Trustee was appointed for Exelco NV by the Commercial Court of Antwerp, Belgium, on November 2, 2017. The Trustee was appointed following an involuntary petition submitted by Exelco’s principal creditor, KBC Bank NV, which alleged, among other things, concealment of negative financial figures, fraudulent transfers to subsidiaries and an unexplained loss of $15 million worth of diamonds over a six month period. The Foreign Representative has also filed a Motion for Recognition of Foreign Main Proceedings.

MF Global UK Limited (in special administration) CVA Proposal

The special administrators of MFGUK have come up with a CVA proposal for its remaining ordinary creditors, which will enable the winding-up of the estate to the benefit of the creditors.

The administrators have made a number of material settlements and realisations during the administration, simplifying the estate and permitting distributions to ordinary unsecured creditors of 90p in the pound.

However, due to complex issues relating to certain key remaining assets and liabilities, they do not expect to be able to make any material further distributions for another 2 years (at least) and they expect it will take 8-9 years to finalise the winding-up of the estate and make a final distribution.

If the CVA is approved, it will give creditors the option to exit the administration early in exchange for a payment that brings their total return to 99.75p in the pound. Creditors can also choose to remain in the estate in the medium term, or participate in the funding of the exit payments and remain in the estate long-term, in exchange for a beneficial interest in the upside on the claims of the exiting creditors and medium-term creditors.

MFGUK currently have around 3,500 creditors but the CVA is anticipated to significantly reduce this number. The anticipated implementation date of the CVA is 15 January 2018.

Send us a message