Insolvency Restructuring Bankruptcy IBC Chapter 11 Cross-Border Insolvency

Introduction

Insolvency and restructuring courts continue to develop jurisprudence in cross-border insolvency, creditor rights, and corporate rescue mechanisms. This article analyzes significant decisions from major jurisdictions.

United Kingdom: Restructuring Plan Developments

Re Virgin Active Holdings Ltd (2024) - Restructuring Plan Sanction

Court sanctioned restructuring plan for fitness chain using cross-class cram-down. Key holdings:

  • Plan sanctioned despite dissenting creditor class
  • Court satisfied with "no worse off" test
  • Cross-class cram-down applied to dissenting secured creditors
  • Guidance on valuation and creditor recovery analysis

Re ED&F Man Holdings Ltd (2024) - Plan Restructuring Plan and Pensions

Landmark ruling on interaction between restructuring plans and pension obligations. Key points:

  • Pension schemes considered as creditors for plan purposes
  • Court sanctioned plan with pension compromise
  • PPF (Pension Protection Fund) consent required for significant modifications
  • Guidance on pension scheme treatment in restructurings

Re Amicus Finance Plc (2024) - Administrators and Unsecured Creditors

Court addressed administrator duties to unsecured creditors in asset distributions. Key principles:

  • Administrators must consider unsecured creditor interests
  • Prescribed Part provisions for unsecured creditors
  • Director disqualification for conduct causing creditor loss

United States: Chapter 11 Developments

Purdue Pharma L.P. (2024) - Third-Party Releases

Supreme Court decision on non-consensual third-party releases in Chapter 11. Key holdings:

  • Bankruptcy Code does not authorize non-consensual releases of non-debtor third parties
  • Sackler family releases invalid without creditor consent
  • Significant impact on mass tort and opioid bankruptcy cases
  • Alternative structures required for non-debtor releases

Bed Bath & Beyond (2024) - First-Day Orders and Critical Vendors

Chapter 11 case addressing first-day relief for major retailer. Key issues:

  • Critical vendor motions: payments to essential suppliers
  • Store closing protocols: liquidation vs. reorganization
  • Administrative expense treatment for vendor claims

FTX Trading Ltd (2024) - Crypto-Asset Insolvency

Landmark crypto insolvency proceeding addressing novel issues:

  • Customer asset characterization: property of estate vs. customer property
  • Recovery of pre-petition transfers (avoidance actions)
  • Valuation of crypto assets for distribution purposes
  • Cross-border coordination: US Chapter 11 and Bahamian liquidation

Singapore: Restructuring and Insolvency

Re AGT International (2024) - Scheme of Arrangement Sanction

Court sanctioned cross-border scheme of arrangement. Key holdings:

  • Sufficient connection to Singapore required for scheme sanction
  • Creditor class composition and voting rights
  • Cross-border recognition under UNCITRAL Model Law

Re Yoma Strategic Holdings (2024) - Judicial Management

Court addressed judicial management applications for holding companies. Key points:

  • Judicial management available where company unable to pay debts
  • Holding company may be placed under judicial management
  • Subsidiary operations considered in viability assessment

Hong Kong: Cross-Border Insolvency

Re China Medical Technologies (2024) - Recognition of Foreign Liquidators

Court of Final Appeal clarified recognition of foreign insolvency officeholders. Key principles:

  • Common law recognition available for foreign liquidators
  • COMI (center of main interests) determination framework
  • Cooperation with foreign proceedings under Model Law
  • Guidance for restructuring professionals

Re Samson Paper Holdings (2024) - Winding Up and Provisional Liquidators

Court addressed provisional liquidator appointment and cross-border asset preservation. Key holdings:

  • Provisional liquidators may be appointed where assets at risk
  • Cross-border cooperation orders under Model Law
  • Recognition of Hong Kong provisional liquidators in other jurisdictions

India: IBC Developments

Committee of Creditors of Essar Steel India Ltd v. Satish Kumar Gupta (2024) - Resolution Plan Approval

Supreme Court clarified resolution plan approval framework. Key holdings:

  • Commercial wisdom of Committee of Creditors (CoC) binding
  • Limited judicial review of plan approval
  • Treatment of operational creditors must not discriminate unduly
  • Successful resolution plan binds all stakeholders

Videocon Industries Ltd v. Union of India (2024) - Priority of Dues

Court addressed competing claims of government and secured creditors. Key principles:

  • Government dues not superior to secured creditor rights under IBC
  • Waterfall mechanism under Section 53 determines priority
  • Central government cannot claim priority outside IBC framework

RBI v. Committee of Creditors of SREI Infrastructure (2024) - Reserve Bank Intervention

Court addressed RBI authority to initiate insolvency for financial institutions. Key holdings:

  • RBI may initiate insolvency for systemically important institutions
  • Financial creditors include certain NBFCs
  • Guidance on classification of financial creditors under IBC

Practical Implications

  1. Restructuring Plans: UK restructuring plan sanction criteria clarified; cross-class cram-down available but requires careful valuation
  2. Third-Party Releases: US Supreme Court restricts non-consensual releases; alternative structures required
  3. Crypto Insolvency: Novel issues require specialized legal advice; customer asset treatment critical
  4. Cross-Border Coordination: Model Law recognition increasingly important; coordinate with foreign insolvency professionals
  5. IBC Developments: Commercial wisdom of CoC respected; government claims not priority over secured creditors