Cross Border Restructuring and Insolvency Update - 31 August 2017

Re Nortel Networks UK Ltd & Ors [2017] EWHC 1429 (Ch)

It was ordered that the Administrators could distribute to unsecured creditors, 8 years after Nortel entered Administration, so long as a reserve was maintained in relation to potential expense claims.

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Vinyls Italia SpA, in liquidation v Mediterranea di Navigazione SpA, C-54/16 EUECJ

The CJEU reviews the conflicts that arise in the defence provided under Article 13 Regulation No 1346/2000 when Liquidators of an Italian company attempt to set aside payments claimed to otherwise be permissible under English law.

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Short stories

Germany: Corporate Insolvency reforms with a particular focus on group insolvencies published

The German Bundestag has recently passed a new law as a result of a long running drive to reform how group insolvencies are to be dealt with in the jurisdiction. The reforms were suspended whilst the European Union formulated the Recast Insolvency Regulation, but, the German legislation has been finalised and the reforms effective from 21 April 2018.

Given the focus of the Recast Insolvency Regulation, it is unsurprising that elements are mirrored within the new legislation, which offers a structure for the German courts to deal with corporate group insolvencies both domestically and on a cross border basis. Previously group insolvencies have been dealt with on an ad hoc basis by the Courts, and the new structure with an emphasis on coordination and cooperation is hoped to increase recoveries for creditors and increase certainty for practitioners.

USA: Long running Chapter 15 insolvency of Australian mining service company ends as creditors approve restructuring

The Australian mining supplier Emeco Holdings Limited ("Emeco") originally filed Chapter 15 proceedings on 11 February 2016. Emeco was looking to complete a significant restructure involving a three way merger and refinancing and debt for equity swaps of around A$680 million. Following creditor approval of the scheme of arrangement, Emeco surfaced from the Chapter 15 proceedings on 7 June 2017.

Whilst the restructure has primarily been based in Australia, Emeco have successfully used the recognition granted by Chapter 15 proceedings to ensure the settlement is enforceable against creditors in the United States. An earlier attempt at the scheme of arrangement failed to receive sufficient creditor backing in November 2016, but the US court was persuaded to leave the case open as negotiations continued to reach this successful restructuring outcome.

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