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Editor's Note As Editor of this issue, I thought it would be of some value to briefly comment on the recent INSOL International seminar held in Toronto, Canada on Friday, 20 October, 2006. As the Co-Chairs, Richard Pettit of PricewaterhouseCoopers LLP and Deborah Grieve of Blankey McMurty LLP, noted in their welcoming statement, that the seminar was the first of hopefully many in INSOL’s “Americas’ Regional Seminar” education programme. The idea for such seminars developed in response to INSOL members’ requests for regular, regionally-based education programmes. It was the hope that such programmes would provide forums in which insolvency professionals from each of the INSOL regions could discuss and explore those issues most relevant to cross-border insolvency practices in their particular region. During the seminar, I had the pleasure of participating in a judicial panel dedicated to a discussion of our experiences as judges in cross-border proceedings and some issues that have developed out of those proceedings [1]. The afternoon session and the balance of the morning session were devoted to those issues most germane to the regional cross-border experience. Reflecting on my experience, I was struck by the fact that these seminars are of value to a wider array of practitioners than simply regional cross-border insolvency professionals. In particular, I believe these seminars provide an excellent opportunity for professionals who may not concentrate in these areas but who subsequently engage in the course of their general practice with the issues regional cross-border specialists confront everyday. Such professionals, I think, will find these regional seminars quite valuable to their practices, and the regional setting will hopefully enable them to participate without expending the time and resources demanded by other INSOL conferences. In the end, then, I am optimistic that a combination of these focused, regional seminars and other, more general conferences will enable us to educate and inform both ourselves and a larger audience as to the many challenging issues arising from cross-border insolvencies. Honourable Mr Justice Arthur Gonzalez |
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| Highlight of this issue | ||||||
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Will China Recognise the Importance of Recognition? Canny investors will be taking a closer look at China’s new Enterprise Bankruptcy Law (EBL) which was passed, after 12 years of deliberation, on 27 August. Its 136 articles send a message loud and clear – China is here to stay and is equipping itself with the tools necessary to compete with market based economies around the globe. The EBL, which comes into force on 1 June 2007, provides for a court rehabilitation procedure, introduces the concept of a moratorium and gives secured creditors priority over employee claims (other than those that accrue before the law’s enforcement). Unsecured creditors will continue to rank behind employee entitlements. Of course, a key component of any modern insolvency law is the framework it provides for recognition and enforcement of foreign insolvency proceedings. There is no doubt that the UNCITRAL Model Law on Cross-Border Insolvency and the EU Regulation on Insolvency Proceedings are a response to the increasing need for co-operation between courts where money flows across national borders. So, how does the EBL shape up in this regard? Not bad, but it could do better. For more details please click here. Sandy Shandro & Paul Siddle |
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| Case Decisions | ||||||
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AMERICAS Recent U.S. Litigation on Credit Default Swaps Disputes arising out of the terms or performance of credit default swaps are treated as questions of contract interpretation. The courts will first look to the express terms of the credit default swap and if it is complete, clear and unambiguous on its face, the credit default swap will be enforced according to the plain meaning of its terms. If the credit default swap is ambiguous, however, the court will look to extrinsic evidence such as industry standards to ascertain the intended meaning of the terms. There are few published court decisions involving credit default swaps in the United States, as many cases are resolved prior to judgment. This article discusses some of the key issues in leading cases such as Aon Financial Products and Aon Corporation v. Société Generale; Eternity Global Master Fund Limited v. Morgan Guaranty Trust Company of New York, In Re Enron Corp., and Deutsche Bank AG v. AMBAC Credit Products LLC. For more details please see full case note by Prof. Janis Sarra, INSOL Scholar. |
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| Legislation | ||||||
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ASIA PACIFIC Insolvency Law Reform – Key ChangesThe draft Corporations Amendment (Insolvency) Bill 2007 and Corporations and ASIC Amendment Regulations 2007 were released on 13 November 2006 by the Parliamentary Secretary to the Treasurer, the Honourable Chris Pearce MP, for public comment. The draft legislation embodies the reforms originally announced in October 2005 and addresses four main areas. (i) Improving outcomes for creditors This may be achieved through the introduction of some key changes to the current law relating to outcomes of creditors that include protecting employee entitlements; informing creditors; streamlining external administration and pooling. For more details please click here. For additional articles on these reforms, please see: Blake Dawson Waldron, Restructuring and Insolvency Alert, November 2006 EUROPE, AFRICA & MIDDLE EAST Road Testing the New French Safeguard ProcedureAmendments to French insolvency law in January 2006 introduced a new process, the procedure de sauvegarde, which is loosely modelled on US Chapter 11. As with any new law, there is a high level of uncertainty as to how the various provisions will work in practice. Two high profile cases so far this year – GAL and Eurotunnel – have highlighted several issues concerning the opening of the procedure, including (i) the formation of creditors’ committees, (ii) the position of bondholders, and (iii) the filing of claims. This article briefly considers these issues and provides some guidance on the interpretation of the law to date. For the full article please see Allen & Overy Bulletin, October 2006, |
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| Articles | ||||||
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ASIA PACIFIC Confluence of Events Heralds Uncertainty for those Seeking to Reorganise Hong Kong Companies Hong Kong’s stable and well-developed legal framework is an important component of the evaluation of the structure and associated credit risk for transactions conducted there or involving a Hong Kong – based party. The Hong Kong legal system has been considered to have a creditorfriendly bias and provides several statutory procedures for dealing with insolvent companies, such as voluntary and compulsory liquidation. One glaring omission has been the lack of a formal statutory corporate rescue procedure. To fill this void, courts in Hong Kong, looking to decisions in other jurisdictions such as the UK and its Union Accident Insurance case of the early 1970’s, have interpreted existing legislation authorising the appointment of a provisional liquidator to be appointed to explore and, if appropriate, implement a corporate rescue. This “judicial band-aid” has become an important part of the “rescue culture” in Hong Kong. Recently, two unrelated events have cast doubts on the continued availability of this judicial bandaid to facilitate corporate rescues or reorganisations. For the full article please see, White & Case Insolvency Notes, October/November 2006, P.9 EUROPE, AFRICA & MIDDLE EAST Antecedent Recoveries and Litigation Funding – A Practical Perspective Insolvency practitioners have benefited from the various conditional fee orders (CFOs) and the Access to Justice Act, 1999. Seemingly, any good cause of action without funding can be brought by an IP without personal risk, using conditional fee agreement (CFA) coupled with litigation insurance. The author of this article observes that this is not always the case and IP’s have to be aware of certain pitfalls that may have been previously overlooked. For the full article please see, Recovery, Winter 2006, P. 32 |
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| Publications | ||||||
EUROPE, AFRICA & MIDDLE EAST Trusts in Prime Jurisdictions, 2nd Ed., Alon Kaplan (Editor), October 2006 This book features analysis from 19 jurisdictions where trusts are part of the economic and legal landscape. It contains 30 chapters, contributed by practitioners and academics on various aspects of trust law, taxation and related subjects, both on and offshore. |
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This issue was kindly sponsored by:
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INSOL Contacts If you would like to send an article for inclusion in one of our forthcoming issues please contact our Technical Manager, Sonali Abeyratne at sonali@insol.ision.co.uk If you would like to introduce a new member to INSOL International please contact our Communications Manager, Penny Robertson at pennyr@insol.ision.co.uk |
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