Cross Border Restructuring and Insolvency Update - April 2016

Fairfield Sentry - Further developments in BVI

Further to our update in November 2014, there has been a further decision in relation to Fairfield Sentry Limited, the largest feeder fund that invested into the fraudulent Bernard L. Madoff Investment Securities.

The decision provides an insight as to the circumstances when a Court should interfere in the decision of officeholders.

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Hosking and Mackay (Joint Liquidators of Hellas Telecommunications (Luxembourg) II SCA) v Apax Partners LLP and Others [2016] EWHC 558 (Ch)

The Companies Court has set out the requirements necessary to serve out of the jurisdiction under the Practice Direction on Insolvency Proceedings.

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Short stories

Saudi Arabia takes out $10 billion in bank loans

Saudi Arabia has taken out a landmark five year loan totalling $10 billion from a number of global banks as it sets out its first international bond issue since 1991 to address a budget shortfall caused by dwindling oil revenues and reserves. In an attempt to deal with the financial issues caused by low oil prices, Saudi Arabia has announced changes that include raising utility prices, cutting subsidies and privatising state assets. A more-detailed economic-overhaul plan is expected in coming weeks.

New "Mini-Insolvency Law" in UAE

The Chairman of the UAE Banks Federation has announced a new "rescue initiative" which they have declared a "mini-insolvency law" in relation to SME debt in the UAE under which member banks can impose a 90-day "standstill" on judicial means to enforce the payment of SME debts. The initiative is designed to benefit SMEs with debts in the range of DH 50 million (c.£9.3m) - DH 1 billion of debt (£18.7m). The effect is likely to be minimal, other than to those SMEs receiving a brief moratorium on debt repayment, however this is a good starting point with some banks having regard to social responsibility when realising debts in what is still a difficult financial time.

New Polish Bankruptcy Law impacts validity of Arbitration Agreements

Polish Bankruptcy Law has been amended under the Act of 5 May 2015. Before this amendment, a declaration of bankruptcy of any person who was party to an Arbitration Agreement caused expiration of the Agreement from the date of bankruptcy. In addition, any arbitration action against the bankrupt was brought to an end. Since the new law came into force on 1 January 2016, following the declaration of bankruptcy of a party to an Arbitration Agreement, the Agreement continues to be effective. Following the bankruptcy, arbitration proceedings are usually continued with the trustee in bankruptcy stepping into the position of the bankrupt.

This update was jointly written by Alan Bennett and Olivia Reader.

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