Yet again our stalwart at INSOL, (Louise Jennings), who searches far and wide for industry news, has curated another excellent set of articles from around the world on a diverse set of topics. Even though we're in the middle of the northern hemisphere summer, our industry continues to give us plenty to think about.
  
The headline article this month, relates to a BVI case dealing with the thorny issue of the statutory approach taken in the BVI in relation to shareholders’ standing as interested parties in BVI proceedings. This is a Court of Appeal decision which hopefully should bring this issue to a conclusion. Other highlights this month include from the US a wide-ranging article dealing with jurisdiction, comity and the presumption of extraterritoriality arising out of the Arcaptia bankruptcy in the US. The thorny subject of IP rights in the US is dealt with in another article which focuses on the ability both of debtor-owners to freely reject them, and of licensees to continue to use them. This is one that is going to the Supreme court for a final decision. 
 
Over in Hong Kong, the Hon. Mr. Justice Harris has handed down a judgment which provides guidance to practitioners on the interaction between the new Singaporean rescue legislation (which implements the UNCITRAL Model Law on Cross-Border Insolvency (the Model Law)) and provisional liquidation in Hong Kong. In doing so, Mr. Justice Harris provided a useful roadmap for future similar situations and at the same time he reiterated his comments about Hong Kong bringing in a modernised corporate rescue procedure.
  

There are a number of articles with a Model Law theme. From Australia, we report on the most recent decision there under the Cross-Border Insolvency Act 2008, In the matter of Rizzo Bottiglieri-de Carlini Armatori SpA. This shipping insolvency case is significant for several reasons including, for the first time in Australia, temporally limited recognition of foreign proceedings.  The Indian Government has proposed that India become the latest nation to adopt the Model Law, with certain modifications and recently released a suggested draft chapter on cross-border insolvency to be included into the Insolvency & Bankruptcy Code, 2016. This addresses a missing link in the ambitious reforms of the Indian insolvency framework and is to be welcomed. And finally, we have a report on the draft model law on recognition and enforcement of insolvency related judgments completed by UNCITRAL Working Group V. 

Stephen Briscoe

FFP (BVI) Ltd

   
“Shareholders / Creditors” Standing in BVI Liquidations – A Reminder
   
Stanford v Akers and McDonald (ECSC – CA 12 July 2018) 
   

This month’s Highlight Article examines a recent decision of the Eastern Caribbean Supreme Court (Court of Appeal) regarding the statutory approach taken in BVI in relation to shareholders’ standing as interested parties in BVI insolvency proceedings. The Appellant, Kevin Stanford, a high-profile businessman involved in numerous fashion-related and other companies, was alleged to own shares in a company (Trenvis) which, in turn, owned shares in Chesterfield United Inc (Chesterfield), a company in BVI liquidation. Stanford had numerous problems with certain decisions of the Liquidators of Chesterfield. 

After a trial at first instance the Commercial Court rejected Stanford’s application on grounds inter alia that Stanford did not have standing under section 273 of the BVI Insolvency Act (the Act). Section 273 of the Act provides that …a person aggrieved by an act, omission or decision of an office holder may apply to the Court and the Court may confirm, reverse or modify the act, omission or decision of the office holder.  This article details the Court of Appeal’s careful examination of the ‘standing’ issue in particular whether Stanford as a shareholder of shareholders of the company in liquidation had standing under section 273 to challenge the decisions of the liquidators. 

By

Brian Child

Senior Counsel

  
To read the full article please click here

For the case decision please click here

 
Cases
 
Cayman Islands
  
On the Record Third Party Access to Cayman Islands Court Transcripts and Evidence 
  
The International Banking Corporation BSC (In Administration) v Ahmad Hamad Algosaibi & Brothers Company 
   
The International Banking Corporation (TIBC) was a failed Bahraini bank closely involved with the events which formed the subject matter of the fraud litigation in Ahmad Hamad Algosaibi & Brothers Company v SAAD Investments Company. TIBC was not itself party to that claim but, involved in overseas satellite litigation, its Administrators applied to the Grand Court for disclosure of the evidence that had been heard in the course of the main trial. In its decision, the Cayman Islands Court of Appeal has clarified the proper approach to requests by third parties for access to documents deployed in the course of a trial and transcripts of proceedings.
   
For a case note by Walkers, August 2018 please click here
   
For the case decision please click here
   
USA
   
New York Bankruptcy Court Finds Constitutional Authority to Enter Default Judgments Against Foreign Defendants
   
In re Advance Watch Co., Ltd., No. 15-12690 (MG), 2018 WL 3203386 (Bankr. S.D.N.Y. June 29, 2018)
   
In a recent opinion, US Bankruptcy Judge Martin Glenn of the Southern District of New York held that Bankruptcy Courts may enter final default judgments against non-US defendants who fail to respond to a properly served summons and complaint. Judge Glenn held that a properly served foreign defendant in a preference action who fails to respond is deemed to have implied its consent to a Bankruptcy Court’s entry of a final order and, thus, under Stern v. Marshall and its progeny, a Bankruptcy Court may enter a default judgment.
   
For a case note by Arent Fox, August 2018 please click here
   
For the case decision please click here
   
Legislation
  
Cayman Islands
   
The Cayman Islands Adopt a Global Approach to Cross-Border Communication and Co-Operation
   
In a welcome Practice Direction on 30 July 2018, the Cayman Islands adopted the use of the Judicial Insolvency Network Guidelines for Cooperation in Cross-Border Insolvency Matters in cross-border insolvency and restructuring cases (joining Bermuda and the BVI) and the use of the American Law Institute (ALI) / International Insolvency Institute (III) Guidelines Applicable to Court to-Court Communications in Cross-Border Cases. Both Guidelines aim to enhance coordination and harmonisation of cross-border insolvency proceedings and, whilst there are differences, are broadly similar.
   
For the Harneys Article, 8 August 2018, please click here
   
Articles

USA
   
(i) The Arcapita Bankruptcy: A Primer in Jurisdiction, International Comity, and the Presumption of Extraterritoriality
   
Recent decisions arising out of the Arcapita bankruptcy case provide useful guidance regarding the minimum contacts required for US bankruptcy court jurisdiction as well as when and how to apply international comity and the presumption against extraterritoriality in bankruptcy litigation. This article examines these interesting international law concepts as they arose in the Arcapita litigation and highlights the current state of the law with respect to each issue. Additionally, the decisions serve as important reminders for foreign defendants that they may be subject to preference claims or other litigation in US Bankruptcy Courts, even if they believe their ties to the US are minimal.
   
For a case note by George P. Angelich, M. Douglas Flahaut and Christopher K.S. Wong, Arent Fox August 2018 please click here
   
(ii) US Supreme Court Asked to Resolve Critical Trademark Licensing Issues in Bankruptcy
   
Mission Prod. Holdings, Inc. v. Tempnology, LLC (In re Tempnology LLC), 879 F.3d 389 (1st Cir. 2018) (petition for certiorari pending)
   
The economic value of IP rights in US bankruptcy proceedings has risen rapidly. Due to Congress's unique view of trademark licenses, appellate courts are increasingly divided on the ability both of debtor-owners to freely reject them, and of licensees to continue to use them. The licensee in Tempnology has asked the US Supreme Court to clarify what, if any, rights under a trademark license survive rejection in Chapter 11. As this article makes clear, the Supreme Court's review of this issue to address an issue of growing uncertainty is a matter of global economic significance. 
   
For the full article please see DLA Piper Restructuring Global Insight, 20 July 2018
   

Cases
  
Australia
  
Recognition of Foreign Proceedings Under the UNCITRAL Model Law: Recent Developments in Australia 
   
In the matter of Rizzo Bottiglieri-de Carlini Armatori SpA [2018] FCA 1067  
      
On 29 June 2018 the Federal Court of Australia (the Court) handed down its decision in In the matter of Rizzo Bottiglieri-de Carlini Armatori SpA (Rizzo), the most recent decision under the Cross-Border Insolvency Act 2008 (Cth) (the Act).  Rizzo was an application for recognition of Italian fallimento proceedings as foreign main proceedings under the Act. The case is significant for several reasons. First, it demonstrates the Court’s treatment of Italian fallimento proceedings for the purposes of recognition under the Act. Second, it is a further illustration of the Federal Court’s practice to allow an Admiralty Judge to determine whether an arrest of a vessel ought to be allowed as an exception to the general stay under Art 20(1) of the Model Law (the principle in the Yu line of cases). Third, it includes, for the first time in Australia, temporally limited recognition of foreign proceedings. 
   
For a case note by Angus Stewart SC and Karen Petch, Barristers of New Chambers, Sydney, Australia, August 2018 please click here
   
For the case decision please click here 
      
Hong Kong 
   
Hong Kong Provisional Liquidation Meets Singapore Moratorium: Re CW Advanced Technologies Limited
   
Re CW Advanced Technologies Limited [2018] HKCFI 1705
   
In this recent Hong Kong High Court decision an application made by the company’s largest creditor for the appointment of provisional liquidators was granted.  Despite the significant cross-border background leading to the provisional liquidation application, the parties took the position that they would not need to address the Court’s cross-border concerns, such as the impact and relevance of the Singapore moratorium (under the recently revised Singapore Companies Act) in this case. Nevertheless, the Court provided a helpful list of issues for future applicants to consider when faced with similar cross-border situations and set out some of the key questions that need to be addressed regarding the recognition of the Singapore moratorium, such as whether it could constitute a collective insolvency proceeding.
   
For the case note by Des Voeux Chambers, 20 July 2018 please click here
   
For the case decision please click here 
   
Articles
 
India
 
India Proposes to Adopt the UNCITRAL Model Law on Cross-Border Insolvency 
  
On 20 June 2018, the Indian Government released a suggested draft chapter on cross-border insolvency to be included into the Insolvency & Bankruptcy Code, 2016 (Code). This addresses a missing link in the ambitious reforms of the Indian insolvency framework and is to be welcomed.
   
Despite detailed consideration at the time it was introduced, the Code was largely silent on cross-border matters. The Government has proposed that India become the latest nation to adopt the Model Law, with certain modifications. This briefing summarises the proposals and sets out some initial thoughts on the potential impact of the proposals if implemented. Responses to the proposals were invited by 30 June 2018.
  
For the full article please see Herbert Smith Freehills Legal Briefing, 24 July 2018 

 
INSOL International Special Report – An Evaluation of the Role of Creditors in Insolvency Proceedings: Report on Comparative Study  
 

July 2018

Historically, creditors have had important roles to play in insolvency proceedings. However, insolvency law is constantly evolving and changes in insolvency law may give rise to questions as to whether the roles of creditors in different types of insolvency proceedings, which may be mainly historical, remain appropriate in the modern insolvency environment. This project was undertaken with a view to formulating principles as to how creditor roles in different types of insolvency proceedings should be determined. 
   
Information about the roles of creditors in different insolvency proceedings in different jurisdictions for the purposes of such an analysis were sought. In response to that request, completed questionnaires from outside the United Kingdom were received for Australia, Egypt, France, Germany, Italy, Latvia, New Zealand, Romania, Russia, Spain and the USA.  The results of the comparative analysis of the roles of creditors in these jurisdictions and in the United Kingdom, have now been compiled in this report. 
      

If you would like to send an article for inclusion in one of our forthcoming issues please contact our Technical Officer, Louise Jennings at louise@insol.ision.co.uk

If you would like to introduce a new member to INSOL International please contact our Database Manager, Tony Ashton, at tony@insol.ision.co.uk

American Bankruptcy Institute  
Asociación Argentina de Estudios Sobre la Insolvencia  
Asociacion Uruguaya de Asesores en Insolvencia y Reestructuraciones Empresariales  
Association of Business Recovery Professionals - R3  
Association of Restructuring and Insolvency Experts  
Australian Restructuring, Insolvency and Turnaround Association  
Bankruptcy Law and Restructuring Research Centre, China University of Politics and Law 
Business Recovery and Insolvency Practitioners Association of Nigeria  
Business Recovery and Insolvency Practitioners Association of Sri Lanka  
Canadian Association of Insolvency and Restructuring Professionals  
Canadian Bar Association (Bankruptcy and Insolvency Section)  
Commercial Law League of America (Bankruptcy and Insolvency Section)  
Especialistas de Concursos Mercantiles de Mexico  
Finnish Insolvency Law Association  
Ghana Association of Restructuring and Insolvency Advisors  
Hong Kong Institute of Certified Public Accountants (Restructuring and Insolvency Faculty)  
INSOL Europe  
INSOL India  
INSOLAD - Vereniging Insolventierecht Advocaten 
Insolvency Practitioners Association of Malaysia  
Insolvency Practitioners Association of Singapore  
Instituto Brasileiro de Estudos de Recuperação de Empresas  
Instituto Brasileiro de Gestão e Turnaround  
Instituto Iberoamericano de Derecho Concursal  
Instituto Iberoamericano de Derecho Concursal Colombia
International Association of Insurance Receivers  
International Women’s Insolvency and Restructuring Confederation  
Japanese Federation of Insolvency Professionals 
Korean Restructuring and Insolvency Practitioners Association   
Law Council of Australia (Business Law Section)  
Malaysian Institute of Certified Public Accountants  
National Association of Federal Equity Receivers  
Nepalese Insolvency Practitioners Association  
NIVD – Neue Insolvenzverwaltervereinigung Deutschlands e.V.  
  Recovery and Insolvency Specialists Association (BVI) Ltd  
 Recovery and Insolvency Specialists Association (Cayman) Ltd 
Restructuring and Insolvency Specialists Association of Bahamas
Restructuring and Insolvency Specialists Association of Bermuda 
REFOR–CGE, Register of Insolvency Practitioners within "Consejo General de Economistas, CGE"  
Restructuring Insolvency & Turnaround Association of New Zealand  
Russian Union of Self-Regulated Organizations of Arbitration Managers  
Society of Insolvency Practitioners of India  
South African Restructuring and Insolvency Practitioners Association   
Turnaround Management Association do Brasil
Turnaround Management Association (INSOL Special Interest Group)