 |
|||||||||
 |
Welcome to the seventh edition of the INSOL International News Update. Over the last year there have been significant changes affecting insolvency matters in North America. In the United States the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law. In Canada amendments to The Bankruptcy and Insolvency Act and The Companies’ Creditors Arrangement Act have been passed into law and await enactment. Of particular interest to international insolvency practitioners is Chapter 15, entitled Ancillary and Other Cross-Border Cases, replaces old section 304 of the US Bankruptcy Code. Chapter 15 is broader than its predecessor section and is based on the Model Law on Cross-Border Insolvencies issued by the UN Commission on International Trade Law. Chapter 15 will be a significant tool in cross-border insolvencies as it allows foreign court officers, such as trustees or receivers, to co-ordinate the insolvency process between the US and foreign courts and in some instances actually administer the process in the United States. INSOL’s Annual Regional Conference 2006, to be held in Scottsdale Arizona on May 22-24, is almost upon us. Its topic “Cross-border insolvency : Co-operation or conflict?” should be captivating given the recent changes in the US and other jurisdictions. This will definitely be a great conference! Ralph Neville FCA, BDO Dunwoody LLP
|
|
|||||||
| Highlight of this issue | |||||||||
|
Canadian Insolvency Reform - A Long Process Canada’s federal insolvency laws have been under review since October 2000 by a succession task forces and parliamentary committees. The process culminated last November in the enactment of Bill C-55, which consisted of amendments to the existing Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA) as well as a new statute, Wage Earner Protection Program Act. Despite the lengthy review process that preceded the drafting and introduction of the Bill, it then rushed through Parliament in November with limited committee hearings in the House Commons and none at all in the Senate. This was done in order to ensure the Bill’s passage before Parliament was dissolved for a federal election. While Bill C-55 was enacted and given Royal Assent (as S.C. 2005, c. 47), its proclamation however is not expected until 2007. For further details please click here. For a further article on the Canadian legal reforms please see - By Ralph Neville FCA, BDO Dunwoody LLP
|
|||||||||
| Case Decisions | |||||||||
|
AMERICAS Cayman Islands Criteria for Winding-up Insolvent Companies Examined GFN International Corporation (Unreported) The basis upon which a company under the Companies Law (2004 Revision) could be wound-up was debated in the Grand Court of the Cayman Islands late last year. In the matter of GFN International Corporation it was agreed by both the Petitioner and the Company that the Company was insolvent and was unable to pay its debts. However, the Court ruled that it had the discretion to take other factors into account when deciding whether to order a winding-up of a company. In this matter the Court decided that as there was little likelihood of any benefit to be achieved from the liquidation, that the costs of a liquidation would be significant and that there was also significant opposition from preferred shareholders and therefore, the Company should not be wound up. The Petitioners have recently submitted a notice withdrawing their appeal against the judgment. For more details of this case - Please click here. ASIA & PACIFIC RIM Australia Can Shareholders be Creditors of an Australian Company in Administration? The Sons of Gwalia Appeal and Related Cases On 27 February 2006, the Full Court of the Federal Court of Australia (the Full Court) dismissed an appeal by administrators and a non-shareholder creditor of Sons of Gwalia Limited against a decision of a single Federal Court judge handed down in September last year. The Federal Court at the first instance found that a shareholder’s claim based on misleading conduct by the company and non-disclosure is not subject to be postponed under section 563A, and, therefore will rank on an equal basis with the claims of other creditors. The two central issues before the Full Court were:
On the first issue, unconstrained by the Webb case, the Full Court found that there was no bar on transferee shareholders proving in a winding up in relation to their misleading conduct claims against the company. On the second issue, the Court held that a transferee shareholder, was not bringing his claims in his capacity as a member of the company, and accordingly, the claims were not subject to the postponement effect of section 563A. For more details please see Allens Arthur Robinson, Focus: Insolvency, March 2006. EUROPE, AFRICA & MIDDLE EAST United Kingdom A Cautionary Tale for Liquidators… The judgment of Mr Justice Tomlinson handed down on 12 April 2006 marked the conclusion of 12 years of high profile litigation resulting from the claim brought by the English liquidators of Bank of Credit and Commerce International SA (BCCI SA) against the Bank of England (the Bank). The liquidators’ claim against the Bank was for the tort of “misfeasance in public office” which effectively required the liquidators to prove that Bank of England officials had acted illegally and dishonestly in their supervision of BCCI SA. The litigation against the Bank was massive by any measure. The claim was commenced in 1993, and did not conclude until November 2005 when the liquidators discontinued their claim. The judgment on 12 April 2006 arose in part out of the Bank’s application for all of its costs to be paid on the higher “indemnity basis.” For more details please click here. For the full judgment please click here.
|
|||||||||
| Legislation | |||||||||
|
EUROPE, AFRICA & MIDDLE EAST Hungary Hungarian Bankruptcy Act: Important Changes In Hungary the Act XLIX of 1991 (Bankruptcy Act) rules bankruptcy proceedings, liquidation proceedings and voluntary dissolution. The Bankruptcy Act came into effect on 1 January 1992 and was amended more than 30 times, but the Act has not yet been able to secure its principal aim. In September 2005, the Government agreed to reform its bankruptcy laws and the new draft laws are expected to be submitted to the Parliament by September 2006. It is hoped that the suggested reforms will address the difficulties seen in the existing laws. In addition, several other Acts have also been promulgated or amended in January 2006. For more details of the recent reforms in Hungary please click here.
|
|||||||||
| Articles | |||||||||
|
EUROPE, AFRICA & MIDDLE EAST United Kingdom Co-operation and Communication in the UNCITRAL Model Law The UNCITRAL Model Law on cross-border insolvency, a relatively brief document of only 32 articles has been adopted by several countries and many others are actively considering or in the process of legislating to introduce the Model Law. The most forward looking part of the UNCITRAL Model law is chapter IV, ( articles 25-27) which is based on the ideal of co-operation between courts and representatives. This article discusses some of the salient features of the Model law. For the full article please see Europhenix, 2006, Spring Issue, P. 18. Please also see - The implementation of the UNCITRAL Model Law on cross-border insolvency in Great Britain, INSOL World, 2nd Quarter, 2006, P. 10. ASIA & PACIFIC RIM Australia Employee Entitlements: Public Policy Issues Recent Changes to the Australian “General Employee Entitlements and Redundancy Scheme” (GEERS) signify the first substantial change to the scheme since it’s inception in 2001. The Federal Government has also announced an insolvency reform package to be legislated in 2006, which embraces aspects relating to the issue of employee entitlements in insolvency. This paper emphasises the underlying public policy issues behind both the new extensions and the restrictions to GEERS, which are also of great interest to other countries contemplating similar schemes. For the full article please see Australian Insolvency Journal, 2006, Volume 18, No. 1 P. 12. China Enter the Dragon: Potential Impact of China’s Proposed Bankruptcy Law This is the second article in this series which deals with the potential impact of the draft bankruptcy law, both in China and beyond her geographical borders. The first article which was stated in our previous issue discussed China’s existing bankruptcy regime and the changes proposed by the draft bankruptcy law. For the full article please see White & Case Insolvency Notes, March 2006, P. 8.
|
|||||||||
| News | |||||||||
|
ASIA & PACIFIC RIM China FAIR Conference - Legal and Institutional Reforms of Asian Insolvency Systems The Forum on Asian Insolvency Reform held a conference on 27 - 28th of April in Beijing, and the theme for the conference was on insolvency reforms in the Asian emerging economies. The conference sessions covered Asian insolvency reforms in the last decade, enterprise reorganisation, informal work outs, the role of the courts and the judiciary, regulatory issues, priority claims, creditor participation, treatment of corporate groups and many aspects of cross-border insolvency.
|
|||||||||
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 |
|||||||||
|
This issue was kindly sponsored by:
|
|||||||||
|
|||||||||
 |
|||||||||
