Cross Border Restructuring and Insolvency Update - August 2016

Legend International Holdings Inc (in Liquidation) v Indian Farmers Fertiliser Cooperative Limited [2016] VSCA 151

The Australian Court of Appeal refused an appeal against a winding up order made in relation to Legend in Australia where Chapter 11 proceedings were on foot in the United States.

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In the matter of Caledonian Bank Limited 2016/COM/com/00031

The Supreme Court of the Commonwealth of the Bahamas made an ancillary winding up order against Caledonian Bank Limited, a company registered in the Cayman Islands, under the Companies Winding-Up Amendment Act 2011.

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Short stories

Saudi Arabia proposes changes to Bankruptcy Regime

The Ministry of Commerce and Investment is currently in the process of updating the Saudi Arabian bankruptcy regime. It is anticipated that the new law will come into force in early 2017 and will focus on individuals in financial difficulty who operate small and medium size businesses. In order to protect these private investment projects, the new law will seek to provide assistance to financially stressed debtors to allow reorganisation of their business. In particular, the courts will be able to oblige creditors to agree to a debtor repayment proposal, especially in situations where the debtor is in severe financial difficulty. The new law will distinguish between debtors who may be able to fulfil their financial obligations and resume usual business, compared to those who are unlikely to satisfy their outstanding debts.

Slovakia to introduce new Debt Relief Rules

Discussions in Slovakia are underway to introduce a new personal insolvency regime. It is anticipated that the new regime will come into force on 1 January 2017 and will include provisions which encourage individuals to apply for debt relief following a declaration of bankruptcy. It is proposed that debtors with some form of income and/ or assets will be able to avoid an immediate distribution of assets in the event that they are able to settle at least 30% of their unsecured debt immediately. Debtors with insufficient funds to reach this threshold will be able to request that any court proceedings against them are stayed. However, a debtor will only be able to file for relief once every 10 years to counter balance the fact that this relief is readily available. The new regime will also focus on creating a more accessible loan market for consumers.

Singapore approves proposals to strengthen Debt Restructuring

17 recommendations made by Singapore's Debt Restructuring Committee have been approved by the country's Ministry of Law. The recommendations focus on implementing procedures to encourage fast and cost effective debt restructurings. The main suggestions include provisions which focus on prepack restructuring, automatic moratoriums to support restructuring and also provisions to allow the same Judge to hear related insolvency and restructuring proceedings. In addition, it is envisaged that a dedicated bench of judges will hear all restructuring cases and will also focus on encouraging mediation and arbitration following any disputes. At present, there is no further information as to when and how these recommendations will be actioned.

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