Cross Border Restructuring and Insolvency Update - January 2017

ENEFI Energiahatékonysági Nyrt v Directia Generala Regionala a Finantelor Publice Brasov (DGRFP) [2016] All ER (D) 110 (Nov)

The Court of Justice of the European Union ("ECJ") has handed down a notable judgment in the case of ENEFI Energiahatékonysági Nyrt v Directia Generala Regionala a Finantelor Publice Brasov (DGRFP) [2016] All ER (D) 110 (Nov), ruling that domestic laws governing forfeiture of a claim in insolvency proceedings apply to foreign creditors too.

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Guardians of New Zealand Superannuation Fund & Ors v Novo Banco, S.A. [2016] EWCA Civ 1092

Following the collapse of Banco Espirito Santo, the Court of Appeal held that a $835m loan had not been transferred to Novo Banco

This case concerns a Court of Appeal hearing following the 2014 collapse of substantial Portuguese bank Banco Espirito Santo ("BES").

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Short stories

India's Insolvency and Bankruptcy Code 2016 now in effect

Further to our previous update [], the key provisions of the corporate resolution process in the Insolvency and Bankruptcy Code 2016 came into effect on 1 December 2016, and the liquidation provisions came into force on 15 December 2016. The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 were also published and came into effect on 15 December 2016.

The Regulations seek to improve the liquidation process, reducing time and costs whilst maximising creditor recoveries. The Regulations set out the procedural aspects of the new liquidation processes including the appointment, remuneration, powers and functions of a liquidator, as well as details on how creditors can make claims together with information about the realisation and distribution process.

New personal insolvency regime for Slovakia

In March 2017 Slovakia will bring into force some changes to their personal insolvency regime. The changes are intended to make the personal insolvency process more accessible for debtors. Under the new system, a debtor will be able to relieve themselves of their debt by either engaging in bankruptcy proceedings or by committing to a payment plan under which they have to repay at least 30% of the claims of their unsecured debtors over a five year period.

Another notable change is the introduction of the "homestead exemption" which essentially allows for a small sum to be deducted from the proceeds of sale of one of the debtor's properties, to be returned to the debtor for use in obtaining alternative living accommodation.

UK Supreme Court rules on Article 50 Brexit mechanism

In a judgment handed down on 24 January 2017, the Supreme Court ruled that, in order to lawfully trigger Article 50 of the Treaty on European Union which will commence the Brexit process, Theresa May must hold a parliamentary vote.

The core of the case revolved around two constitutional conventions which, in the specific Brexit context, are conflicting. The first is the principle that the government does not have the power to change law made by an Act of Parliament, or the common law, and therefore cannot simply declare that the European Communities Act 1972 will cease to operate when the UK leaves the EU. The second is the principle that the making and unmaking of treaties is a matter of foreign relations and thus completely within the remit of the government.

In short, the first principle won out by a majority of eight to three, meaning that the government will need to pass fresh legislation in order to trigger Article 50. The Supreme Court also ruled that devolved governmental bodies such as those in Scotland and Northern Ireland will have no say in the UK leaving the EU; the power to change the constitution of the UK rests with the UK Parliament in Westminster.

As a consequence, it is expected that the government will introduce a Brexit bill on Thursday.

This update was jointly written by Alan BennettOlivia Bridger and Rachel Maddocks.

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