The New Brazilian Bankruptcy Law – Some Practical Concerns
By Timothy John Smith and Carlos Derraik
Derraik Advogados
Associado a - Associated with
Squire, Sanders & Dempsey L.L.P.
Rio de Janeiro, RJ, Brazil

The proposed Brazilian Bankruptcy law as proposed by the House of Representatives was extensively amended by the Senate. The Senate revisions are currently being considered in the House of Representatives, which has appointed a commission to recommend changes to the Senate version.

The following comments are based on some of the more important provisions that appear likely to be included in the final law. However, it is impossible to determine which provisions will actually be included in the law as ultimately adopted.
To read full story, click here

Fairchild Summary
Scott K. Brown
Lewis and Roca LLP

In the recent decision, In re Petition of Dr. Eberhard Braun, in his Capacity as Insolvency Administrator for Fairchild Dornier GmbH, Case No. 02-52351-LMC, the bankruptcy court denied a motion to reconsider a motion seeking relief from a 11 U.S.C. § 304 injunction. The court denied the motion to reconsider because the motion presented evidence – for the first time – that could have and should have presented at the initial hearing but was not (a valuable lesson for all practitioners). The court further said that “new evidence” did not persuade it that its ruling was manifestly wrong. This decision, not yet published, was entered on July 16, 2004.
To read full story, click here

Thailand Amends its Bankruptcy Laws
George M. Kelakos
Heller Ehrman White & McAuliffe LLP (New York)

On June 2004, the Kingdom of Thailand enacted amendments to the Thai Bankruptcy Act. The new amendments to the Act (the “Amendments”), which are codified in Bankruptcy Act (No. 7), B. E. 2547 (2004), came into effect on July 16, 2004-one day after publication in the Thai Government Gazette.

The Act was significantly revised in 1998 and 1999 to include a new Business Reorganization chapter (Chapter 3/1 of the Act) and to modernize Thailand’s bankruptcy laws in response to the fallout from the Asian Crisis of 1997. Over the past four years, a number of proposals for amending the Act have been considered and reviewed by the Thai government. The proposed amendments were to address perceived loopholes and gaps in the law. While these proposals may eventually result in further amendments to the Act, the Amendments principally focus on individual bankruptcies by streamlining and clarifying when and under what circumstances an individual may obtain a discharge in bankruptcy cases.
To read full story, click here

American Bankruptcy Institute
Caribbean Insolvency Symposium

November 11–12, 2004

Caribe Hilton
San Juan, Puerto Rico
Join ABI in Puerto Rico for the Caribbean Insolvency Symposium!

¡Saludos!

This first-ever ABI conference held on the Caribbean island of Puerto Rico brings together top national speakers on today’s significant cross-border commercial bankruptcy law issues. A Latin American flavor is added by faculty members from the Dominican Republic and bankruptcy judges from Puerto Rico. All programs will be simultaneously translated (English–Spanish). One of the island’s premier resorts, the Caribe Hilton, provides a memorable venue for the conference. Please join us.

This year’s conference will provide over 6 hours of CLE/CPE credit in addition to a variety of optional events and networking opportunities. Program highlights include:

• Simultaneous translation (English–Spanish)
• Opening Reception Guest Speaker: Sila M. Calderón, Governor of Puerto Rico
• Conflict of Laws and Ancillary Foreign Proceedings
• Insolvency Risk Management in the Caribbean Basin
• and much more!

Join ABI in Puerto Rico this November!

Basic Provisions of German Insolvency Law*

1. Effective Date of New Law. A new German insolvency law became effective on January 1, 1999.

2. Commencement of Proceedings. A German insolvency proceeding may be commenced for a business debtor only (a) if the debtor has a continuing inability (or, in the case of a proceeding commenced by a debtor, a threatened inability) to pay any of its debts as they become due; or (b) if the going-concern value of the debtor’s assets is less than the aggregate amount of the debtor’s liabilities. Under German corporate law, a board of directors may be liable for damages (and perhaps subject to criminal liability) if it does not commence an insolvency proceeding within three weeks following the date when the corporation’s liabilities exceed the value of its assets.
To read full story, click here (PDF)

*Presented at the ABI Northeast Bankruptcy Conference.

Basic Provisions of United Kingdom Insolvency Law*
By:Paul P. Daley
George W. Shuster, Jr.
WILMER CUTLER PICKERING HALE AND DORR LLP

1. Sources of Law. The insolvency law in the United Kingdom is codified primarily in
the Insolvency Act of 1986 (as amended by the Insolvency Act of 2000 and the new Enterprise Act of 2002) and the Companies Act of 1985, although the common law from before and after 1986 informs the interpretation of these statutes. The Enterprise Act of 2002, in force since September 15, 2003, changes the existing UK insolvency law mostly in the area of administration. The new EU Regulation on Insolvency Proceedings, effective as of May 31, 2002, changes the scope and application of UK insolvency law in some material ways—for example, businesses principal locations in the UK may now be subject to UK insolvency proceedings, even if organized under foreign law.

2. Types of Insolvency Proceedings. The four legal methods for addressing a business
insolvency are as follows: (1) administrative receivership for the benefit of a secured creditor (a remedy for secured creditors rather than an insolvency proceeding, per se and not discussed here in detail. This remedy has been, to a significant degree, curtailed by the Enterprise Act of 2002); (2) administration, which, combined with method (4) below, is most closely analogous to Chapter 11 reorganization in the United States; (3) winding up (also called liquidation), which is most closely analogous to Chapter 7 liquidation in the United States; and (4) statutory compositions and arrangements with creditors, for example, a “scheme of arrangement” under Section 425 of the Companies Act or a company voluntary arrangement under the Insolvency
Act (a “CVA”). Administration is not a complete process in itself — it is instead a means of reaching a “scheme of arrangement” or CVA for the reorganization of a business, thereby avoiding or postponing liquidation.
To read full story, click here (PDF)

*Presented at the ABI Northeast Bankruptcy Conference.

Introduction to the United Kingdom's Enterprise Act 2002*
By: Andy Scruton and Lee Smith

A number of European countries have recently refined or are in the process of refining their insolvency legislation, and they are typically using the U.S. chapter 11 approach as a template for these reforms. The German Insolvency Act, introduced on Jan. 1, 1999, focuses on reorganization procedures; the United Kingdom brought into force the Enterprise Act 2002 on Sept. 15, 2003, and following the recent demise of Parmalat, the Italian government rushed through new legislation that is considerably more debtor-friendly than pre-existing statutes. It is anticipated that later this year, France will also introduce new legislation following the recent publication of a government paper on insolvency. In this article, we summarize the key elements of the Enterprise Act and its implications on various stakeholders.
To read full story, click here

*From the July/August ABI Journal