Click here to download the Restructuring & insolvency 2019 report, published by Getting the Deal Through.

Jurisdictions covered

The following 43 jurisdictions are covered in this report:

Australia; Austria; Bahamas; Bahrain; Belgium; Bermuda; Brazil; British Virgin Islands; Canada; Cayman Islands; China; Cyprus; Dominican Republic; England & Wales; European Union; France; Germany; Greece; Hong Kong; Hungary; India; Isle of Man; Italy; Japan; Jersey; Kenya; Korea; Malaysia; Mexico; Netherlands; Norway; Peru; Portugal; Russia; Singapore; Slovenia; South Africa; Spain; Switzerland; Thailand; United Arab Emirates; United States; Vietnam.

Questions

The set of questions relating to the topic of restructuring & insolvency and answered by the guide for each jurisdiction covered include:

General

• • What main legislation is applicable to insolvencies and reorganisations?
• • What entities are excluded from customary insolvency or reorganization proceedings and what legislation applies to them? What assets are excluded or exempt from claims of creditors?
• • What procedures are followed in the insolvency of a government-owned enterprise? What remedies do creditors of insolvent public enterprises have?
• • Has your country enacted legislation to deal with the financial difficulties of institutions that are considered “too big to fail”?
• • What courts are involved? What are the rights of appeal from court orders? Does an appellant have an automatic right of appeal or must it obtain permission? Is there a requirement to post security to proceed with an appeal? (If so, how is the amount determined?)

Types of liquidation and reorganisation processes

• • What are the requirements for a debtor commencing a voluntary liquidation case and what are the effects?
• • What are the requirements for a debtor commencing a voluntary reorganisation and what are the effects?
• • How are creditors classified for purposed of a reorganisation plan and how is the plan approved? Can a reorganisation plan release non-debtor parties from liability, and, if so, in what circumstances?
• • What are the requirements for creditors placing a debtor into involuntary liquidation and what are the effects? Once the proceeding is opened, are there material differences to proceedings opened voluntarily?
• • What are the requirements for creditors commencing an involuntary reorganisation and what are the effects? Once the proceeding is opened, are there any material differences to proceedings opened voluntarily?
• • Do procedures exist for expedited reorganisations (eg, “prepackaged” reorganisations)?
• • How is a proposed reorganisation defeated and what is the effect of a reorganisation plan not being approved? What if the debtor fails to perform a plan?
• • Are there corporate procedures for the dissolution of a corporation? How do such processes contrast with bankruptcy proceedings?
• • How are liquidation and reorganisation cases formally concluded?
• • What is the test to determine if a debtor is insolvent?
• • Must companies commence insolvency proceedings in particular circumstances?
• • If proceedings are not commenced, what liability can result for directors and officers? What are the consequences for directors and officers if a company carries on business while insolvent?
• • Apart from failure to file for proceedings, are corporate officers and directors personally liable for their corporation’s obligations? Are they liable for corporate pre-insolvency or pre-reorganisation actions? Can they be subject to sanctions for other reasons?
• • Do the duties that directors owe to the corporation shift to the creditors when an insolvency or reorganisation proceeding is likely? When?
• • What powers can directors and officers exercise after liquidation or reorganisation proceedings are commenced by, or against, their corporation?
• • What prohibitions against the continuation of legal proceedings or the enforcement of claims by creditors apply in liquidations and reorganisations? In what circumstances may creditors obtain relief from such prohibitions?
• • When can the debtor carry on business during a liquidation or reorganisation? Is any special treatment given to creditors who supply goods or services after the filing? What are the roles of the creditors and the court in supervising the debtor’s business activities?
• • May a debtor in a liquidation or reorganisation obtain secured or unsecured loans or credit? What priority is given to such loans or credit?
• • In reorganisations and liquidations, what provisions apply to the sale of specific assets out of the ordinary course of business and to the sale of the entire business of the debtor? Does the purchaser acquire the assets “free and clear” of claims or do some liabilities pass with the assets?
• • Does your system allow for “stalking horse” bids in sale procedures and does your system permit credit bidding in sales?
• • Can a debtor undergoing a liquidation or reorganisation reject or disclaim an unfavourable contract? Are there contracts that may not be rejected? What procedure is followed to reject a contract and what is the effect of rejection on the other party? What happens if a debtor breaches the contract after the insolvency case is opened?
• • May an IP licensor or owner terminate the debtor’s right to use the IP when a liquidation or reorganisation is opened? To what extent may IP rights granted under an agreement with the debtor continue to be used?
• • Where personal information or customer data collected by a company in liquidation or reorganisation is valuable, are there any restrictions in your country on the use of that information or its transfer to a purchaser?
• • How frequently is arbitration used in liquidation or reorganisation proceedings? Are there certain types of disputes that may not be arbitrated? Can disputes that arise after the liquidation or reorganisation case is opened be arbitrated with the consent of the parties?

Creditor remedies

• • Are there processes by which some or all of the assets of a business may be seized outside of court proceedings? How are these processes carried out?
• • What remedies are available to unsecured creditors? Are the processes difficult or time-consuming? Are pre-judgment attachments available?

Creditor involvement and proving claims

• • During the liquidation or reorganisation, what notices are given to creditors? What meetings are held and how are they called? What information regarding the administration of the estate, its assets and the claims against it is available to creditors or creditors’ committees? What are the liquidator’s reporting obligations?
• • What committees can be formed (or representative counsel appointed) and what powers or responsibilities do they have? How are they selected and appointed? May they retain advisers and how are their expenses funded?
• • If the liquidator has no assets to pursue a claim, may the creditors pursue the estate’s remedies? If so, to whom do the fruits of the remedies belong? Can they be assigned to a third party?
• • How is a creditor’s claim submitted and what are the time limits? How are claims disallowed and how does a creditor appeal? Can claims for contingent or unliquidated amounts be recognised? Are there provisions on the transfer of claims and must transfers be disclosed? How are the amounts of such claims determined?
• • To what extent may creditors exercise rights of set-off or netting in a liquidation or in a reorganisation? Can creditors be deprived of the right of set-off either temporarily or permanently?
• • May the court change the rank (priority) of a creditor’s claim? If so, what are the grounds for doing so and how frequently does this occur?
• • Apart from employee-related claims, what are the major privileged and priority claims in liquidations and reorganisations? Which have priority over secured creditors?
• • What employee claims arise where employees’ contracts are terminated during a restructuring or liquidation? What are the procedures for termination? (Are employee claims as a whole increased where large numbers of employees’ contracts are terminated or where the business ceases operations?)
• • What remedies exist for pension-related claims against employers in insolvency or reorganisation proceedings and what priorities attach to such claims?
• • Where there are environmental problems, who is responsible for controlling the environmental problem and for remediating the damage caused? Are any of these liabilities imposed on the insolvency administrator personally, secured or unsecured creditors, the debtor’s officers and directors, or on third parties?
• • Do any liabilities of a debtor survive an insolvency or a reorganisation?
• • How and when are distributions made to creditors in liquidations and reorganisations?

Security

• • What principal types of security are taken on immoveable (real) property?
• • What principal types of security are taken on moveable (personal) property?

Clawback and related-party transactions

• • What transactions can be annulled or set aside in liquidations and reorganisations and what are the grounds? Who can attack such transactions?
• • Are there any restrictions on claims by related parties or non-arm’s length creditors (including shareholders) against corporations in insolvency or reorganisation proceedings?

Groups of companies

• • In which circumstances can a parent or affiliated corporation be responsible for the liabilities of subsidiaries or affiliates?
• • In proceedings involving a corporate group, are the proceedings by the parent and its subsidiaries combined for administrative purposes? May the assets and liabilities of the companies be pooled for distribution purposes?

International cases

• • Are foreign judgments or orders recognised and in what circumstances? Is your country a signatory to a treaty on international insolvency or on the recognition of foreign judgments?
• • Has the UNCITRAL Model Law on Cross-Border Insolvency been adopted or is it under consideration in your country?
• • How are foreign creditors dealt with in liquidations and reorganisations?
• • May assets be transferred from an administration in your country to an administration of the same company or another group company in another country?
• • What test is used in your jurisdiction to determine the COMI (centre of main interests) of a debtor company or group of companies? Is there a test for, or any experience with, determining the COMI of a corporate group of companies in your jurisdiction?
• • Does your country’s system provide for recognition of foreign insolvency proceedings and for cooperation between domestic and foreign courts and domestic and foreign insolvency administrators in cross-border insolvencies and restructurings? Have courts in your country refused to recognise foreign proceedings or to cooperate with foreign courts and, if so, on what grounds?
• • In cross-border cases, have the courts in your country entered into cross-border insolvency protocols or other arrangements to coordinate proceedings with courts in other countries? Have courts in your country communicated or held joint hearings with courts in other countries in cross-border cases? If so, with which other countries?