Insolvency Blog -

Schefenacker PLC's creditors' meeting, which was due to have been held on Friday 30 March to cram down €200million of bondholder claims to a 5% equity stake through a Company Voluntary Arrangement, has been adjourned to 4 May, according to the company and as reported by Plastics Industry News. Modifications offering bondholders 15% of the equity and a total of €7.5m in cash will be put to the vote when the meeting reconvenes. Speculation (see earlier post) that the original proposals, published on 9 February, did not offer enough for bondholders proved correct. Full details of the modifications - particularly how far...

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David Wood's new blog, Insolvency Consultant and Bankruptcy Trustee, offers a Canadian perspective on the insolvency and restructuring world. Visit it and see what you think! David's firm, Boale, Wood & Company, is an insolvency boutique based in Vancouver....

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The famous decision on COMI (Centre of Main Interests) and the opening of main insolvency proceedings under the European Insolvency Regulation, which involved an Irish subsidiary of the Italian Parmalat group, is not the easiest to find quickly on the internet, so here's the link: Eurofood IFSC Ltd, European Court of Justice Case C-341/04, Judgement of the Court (Grand Chamber), 2 May 2006 and here's the preceding Advocate General's Opinion: Opinion of Advocate General Jacobs, 27 September 2005 For a selection of commentaries, try the following links: eir-database.com: Commentary on Case C-341/04 A&L Goodbody (solicitors for the Irish...

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For a useful and accessible summary of the key points of Cypriot insolvency law, see Andreas Neocleous' article here....

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The Court of Appeal's judgement given by Lord Justice Neuberger in Re: Lune Metal Products Limited (in administration), [2006] EWCA Civ 1720, is a delightful model of clarity of thought and expression and is worth reading for that alone. The point of the case is short. The administrators in a pre-Enterprise Act administration may obtain the court's sanction to make a distribution to creditors only if the distribution is a condition of their discharge. I am grateful for my attention being drawn to the case by Upload-Finance....

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When an insolvency practitioner applies to the court for directions, the estate may be at risk of an adverse costs order. Mike Pavitt and Nick Keitley's article on the Beam Tube Products case (Fanshawe & Adshead v Amav Industries Limited and others: All ER (D) 246 (Feb); (2006) EWHC 486 (Ch)), which followed Spectrum Plus, carries a footnote illustrating that risk. The joint administrative receivers applied for directions about the proper characterisation of purported fixed charges. The court accepted the joint administrative receivers' views that: a floating charge over the proceeds of book debts was inconsistent with the charge over the book debts being...

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Debtors migrate but creditors forum shop. Robert Hickmott and Alex Ballman write in Legal Week about how the trio of German cases: Deutsche Nickel Hans Brochier Schefenacker illustrate the post-Eurofood attitude to COMI (centre of main interests) under the European Insolvency Regulation. It has been established through cases like Staubitz-Schreiber that debtors can move their COMI, and this facility was used in the Collins & Aikman restructuring and insolvencies. But forum shopping, where creditors race to their court of choice, is what the European Insolvency Regulation sought to avoid. With COMI now established as elsewhere than the place of a...

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Bondholders may not find 5% of the equity an appealing prospect, but the level of pain to be borne by Schefenacker's existing shareholders is yet to emerge. The company has announced replacement of €250m 1st and 2nd lien debt and €200m of subordinated bonds with new debt of €305m: €25m senior revolving credit €170m senior term loan €110m mezzanine Some of the €55m "new money" is said to come from a mezzanine investment from the group's owner, Dr Alfred Schefenacker, who is also transferring minority interests in Schefenacker Engelmann Spiegel GmbH to...

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Bob Eisenbach's post at In The (Red) is a great overview of Chapter 15, the US implementation of the UNCITRAL Model Law on Cross-Border Insolvency. As Bob says: On October 17, 2005, as part of the Bankruptcy Abuse Prevention and Consumer Protection Act (known as "BAPCPA"), a new Chapter 15 of the Bankruptcy Code went into effect governing ancillary and other cross-border cases. (For those already familiar with ancillary proceedings, Section 304 of the Bankruptcy Code, which previously governed those proceedings, was repealed although many of its concepts have been retained in Chapter 15.)" Chapter 15 is used: principally by representatives of or creditors in foreign...

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GILD , the Global Insolvency Law Database, is a resource dedicated to all aspects of credit and debt, including debtor and creditor rights, the creation and enforcement of security interests, corporate restructuring, bankruptcy, reorganization and liquidation. At the heart of the World Bank's Insolvency Initiative, GILD is designed to promote understanding and awareness of best practices by presenting information on the latest developments and systems adopted or proposed in countries and regions throughout the world. GILD contains reports on cutting edge innovations, the World Bank Principles and Guidelines for Effective Insolvency and Creditor Rights Systems, explanatory overviews by experts in...

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