Category Archives: Bankruptcy

AS the saying goes where theres muck, theres brass.

And it took a whole lot of sh*t-shovelling and graft for Milton Harris to dig himself out of bankruptcy hell and rebuild his training career.

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Now he has a lively contender for the 250,000 Ladbrokes Trophy in Danny Whizzbang, who can continue a remarkable rise in fortunes for west country-based Harris.

Winners at Cheltenham and Aintree this season have put his team back on the map after a torrid spell.

The 62-year-old, who had amassed 172 winners over a ten-year career, declared himself bankrupt in 2011 and had his licence taken away.

He tried and failed on two occasions to be let back into the training ranks.

Only after a seven-year spell in the dark did the BHA finally relent and Harris made the move from the Cotswolds to his new home in Warminster, Wiltshire with just two members of staff and a handful of moderate horses.

He said: It has been hard work. The staff rode the horses and I mucked out every box on my own.

It wasnt easy, I was doing the dirty work every day as we had no choice.

It was a tricky time, I wouldnt want to go there again. It was hard for me personally, emotionally and financially.

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You wouldnt have wished it on your enemy.

But you try not to let it knock you down. You have to get up and get on with it.

Did I do some things wrong? Yes. I have no bitterness towards the BHA as they have a thankless task, but sometimes you do question whether its something else youve done.

Having spent so long on the sidelines, the comeback was never going to be straightforward. Was Harris always planning to get back in the game?

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Oh God, yes, he answered before the question was close to being finished.

I was always going to come back, the only reason I wouldnt have was if the BHA didnt let me. I never went away, I stayed in the industry as much as I could. I managed horses for a few people, but it wasnt rewarding, especially not financially. I was struggling.

I never left the industry but people do forget about you and it wasnt easy getting back into the swing of things.

Already on 28 winners for the campaign, Harris is a shoo-in to beat his previous best of 32 with more than five months of the season to run.

Stable star Knight Salute has already notched a Grade 2 at Cheltenham and his trainer thinks hes the real deal, with Aintree winner Legionar another youngster he has high praise for.

After what hes been through, most would be satisfied with a full yard of horses and a growing team, but Harris wants more. He said: Weve got 52 stables and were full, we have about 60 in with a few in the fields and what not. But it wasnt always like that, far from it.

Im very grateful, Im a hardy b*****d, but Im grateful for where we are and thats only possible because of loyalty and working bloody hard.

In my last full season before the ban I finished 22nd in the championship, out of about 650 which I would say is in the Premier League the relegation zone!

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Now were back in that position, Id like to think, but weve got to get ourselves in Europe as they say. Thats hard with the horses we have, we dont pay a lot of money for the ones in but were doing our best to get there.

The phone is ringing a hell of a lot more, that wouldnt have happened 18 months ago.

Its lovely, but you cant lose sight of the fact you need to train winners the bubble can quickly burst, as we know.

Danny Whizzbang was bought cheaply from Paul Nicholls and will make his first start for Harris in the Newbury feature.

A Grade 2 winner at the track, hes no lost cause and the Harris horses could not be in better form. The trainer said: He was 50-1 when the race first came out, now hes shortened up into about 33-1 and I expect hell be about 25-1 before the off.

I have a feeling he might be the kind of horse to catch fresh. I feel like while the horses are healthy we have to have a shot.

Hes not a sexy workhorse, but boy hes fit, his blood count is perfect and were going to put a bit of headgear on him.

Paul is a good friend of mine. Youre never going to improve one of his massively so we need to try and change something. A change of scenery can sometimes be enough to do the trick.

To even have a runner in a race like this is something. God forbid he runs a good race!

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Trainer hit with bankruptcy and forced to muck out completes remarkable comeback with Cheltenham and... - The Sun

KATIE Price has swerved her final bankruptcy hearing AGAIN as the court date has been pushed back to February 2022, The Sun can reveal.

The 43-year-old star was due to return to court before the end of the year to update trustees on paying back her debts - but the hearing has now been rescheduled.

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A source told us: "Katie was due in court next month but now the court date has been moved to Feb 2022 - which is disappointing for a lot of creditors."

The former glamour model was declared bankrupt in November 2019, and in August we revealed that she faces prison if she misses her next hearing.

After the 2019 ruling, Katie was supposed to pay off 12,000 a month to her creditors after taking out an individual voluntary arrangement (IVA) - but failed to do so.

The next hearing is to review her attempts to pay back her hefty debts to creditors two years after going bust.

Katie owes a staggering 3.2 million to her creditors, but is unlikely to pay it all back.

The mother-of-five saw her once lucrative 45million media empire fall apart after the downfall of her third marriage to Kieran Hayler and the collapse of her businesses.

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And earlier this year, Katie was hit with a repossession order for her 1.35million home after she failed to repay a debt of more than 500,000 on the property dubbed the Mucky Mansion.

She faces losing the house if she cannot stump up the cash to pay off her debtors before a repossession hearing.

A Land Registry search for the property reveals owner Katie owes money to both Kensington Mortgage Company and solicitor Archerfield Partners LLP.

It has been a difficult few months for Katie, who was admitted to rehab in September after pleading guilty to drink-driving while disqualified.

She was spared an immediate jail term despite flipping her BMW after a booze and drugs bender.

But she could still face jail when sentenced on December 15.

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Katie Price swerves final bankruptcy hearing AGAIN as court date is pushed back to February 2022... - The Sun

By Lucia Osborne-Crowley (November 22, 2021, 6:31 PM GMT) -- A judge ruled on Monday that businessman Pramod Mittal must hand over documents while the court considers whether to revoke his bankruptcy agreement on the request of one of his creditors, which alleges that Mittal misled the court about his debts.

Insolvency and Companies Court Judge Catherine Burton granted a request from Moorgate Industries UK Ltd. to order Mittal, the chairman of steel company Ispat Industries, to hand over documents about his financial interests.

Judge Burton agreed with Giselle McGowan of 9 Stone Buildings, who represents Moorgate, that the documents, in particular a trust deed relating to a trust of which...

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Steel Magnate Ordered To Produce Docs In Bankruptcy Row - Law360

ALEJANDRA OLCESE

Updated Tuesday, 23 November 2021 16:50

The debtors exemption from filing bankruptcy is extended until June 30, 2022

The First Vice President and Minister of Economic Affairs and Digital Transformation, Nadia CalvioMarta PerezEFE

The Government has again extended the bankruptcy moratorium until the June 30, 2022, which maintains that debtors who are in a situation of insolvency do not have the duty to request the declaration of insolvency for at least half a year or more.

As Law 16/2020 was extended -which initially maintained the moratorium until December 31, 2020 and was subsequently extended until December 31, 2021- the contest requests required presented by creditors.

The objective is that viable companies under normal market conditions have legal instruments that allow them keep your activity and employment and have an additional margin to restore your equity balance while the modernization of the Spanish bankruptcy regime is being processed , the Government explained this Tuesday after the meeting of the Council of Ministers.

But the extension of this bankruptcy moratorium involves two risks. On the one hand, it increases the probability that there is a judicial collapse when the obligation to present competitions is reestablished, since there will be a wave of entries in the courts that must be reconciled with those that were in process.

And, on the other hand, given that companies are not obliged to file for bankruptcy, some experts warn that they are not taking sufficient measures to guarantee their survival, thereby aggravating the risk that the number of zombie companies grows.

The latter has warned on numerous occasions the Bank of Spain. The bankruptcy moratorium, if it is prolonged in time, can contribute to a higher survival rate of unviable companies, which, in the absence of certain financial support measures (bank refinancing or new credit from their contractual counterparts), will disappear in a short period of time. In the economic literature, these companies are often referred to as zombie companies, has pointed out.

Once the moratorium expires, now in June 2022, you can expect a significant rise in the number of applications for competition.

The ease with which Commercial Courts are congested highlights the relevance of analyzing possible solutions that promote the restructuring of the debts of insolvent but viable companies in the medium term, facilitate the liquidation of unviable companies and reduce the duration of insolvency proceedings to avoid the depreciation of business assets and increase the credit recovery rates from creditors, asked the supervisor.

The Registry of Forensic Economists (REFOR) warns today that one of the main threats is a possible collapse in the Courts due to the accumulation of bankruptcy proceedings after the end of the bankruptcy moratorium on December 31, 2021 and due to the coexistence of live bankruptcies of the system that is still in force; in which both systems will coexist for a time .

Match this warning Manuel Gordillo, partner of the firm Abencys, who points out that in view of the number of competitions presented so far this year, it is evident that the bankruptcy moratorium is generating a sedative effect in companies in difficulty, supply them in a false sensation that the decision on the measures to be adopted for the survival of the business can be postponed indefinitely.

The bankruptcy moratorium is not helping to promote survival, quite the contrary, artificially postponing the solution to the problem. Many companies in difficulties, which should have already faced difficult measures but necessary for their survival, continue to worsen their condition and move away from a solution, he laments.

He is in favor of fixing requirements to qualify for this moratorium, and believes that there are many companies that have taken advantage of the extension of the bankruptcy moratorium, delaying the presentation of the bankruptcy by not being forced to do so. In this way, zombie companies are more and more recurrent in the business fabric that, in reality, although they appear active, they do not have the capacity to continue with their activity, he points out.

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The new extension of the bankruptcy moratorium increases the risk of judicial collapse and zombie companies - Central Valley Business Journal

The Mexican ceased carrier Interjet has appointed a new general director and CEO. His name is Federico Bertrand Rubio, and previously he worked as the CEO of Toluca International Airport, a white elephant hub near Mexico City. The announcement came as a surprise to everyone because Interjet hasnt operated a commercial flight in almost a year and is effectively in debt with many parties in Mexico and abroad.

Interjet was a Mexican commercial carrier operating between 2005 and 2020. The airline ceased operations on December 11, 2020. One month later, Interjet employees filed a strike and took over the airlines infrastructure.

In the last few months, Interjets management has maintained that the airline will fly again, although that seems highly unlikely. One of the Interjet owners, Alejandro del Valle, was detained in September on fraud charges. At Mexicos request, Interpol has issued an international arrest warrant for Miguel Aleman, co-founder of the airline.

Interjet has approximately US$1.25 billion in liabilities. It owes money to its employees, the Mexican government, several airports domestically and internationally, and customers.

Currently, Interjet is facing a bankruptcy process under Mexican law. The carrier hopes to strike a deal with creditors so it can re-start operations. Nonetheless, lawyers specialized in Mexicos bankruptcy law see an Interjet revival as improbable.

Previous airline bankruptcy processes in Mexico have shown how difficult it is to re-start a carrier. Mexicana de Aviacin, arguably the most famous Mexican carrier, filed for bankruptcy ten years ago, and the process is still ongoing.

Despite all the legal problems, Interjet appointed a new CEO. Federico Bertrand Rubio got the job. The airline said in a statement,

At Interjet, we continue working tirelessly so, shortly, and accompanied by our employees and providers; we can operate again and give our passengers the commercial service they deserve. Therefore, we have appointed the engineer, Luis Federico Bertrand Rubio, as the companys new General Director and CEO.

Bertrand Rubio has over 50 years of experience in the aeronautical business. His last job was as the General Director of Toluca International Airport. He took that previous job with the commitment to bring back the commercial airlines to Toluca. He failed. Toluca International Airport has only a couple of commercial flights per week, operated by airlines like Aeromar (Toluca-Acapulco) and Conviasa (Toluca-Caracas).

The bankruptcy of Interjet was one of the top stories in the Latin American and Caribbean region in 2020. Unlike other carriers like Avianca, Aeromexico, and LATAM, Interjet was unable to protect itself. Interjet lost its 88 aircraft fleet in a matter of months.

The exit of the Airbus fleet increased the scheduling issues for Interjet, which had to cancel flight after flight. Moreover, despite its intentions to retire the Sukhoi fleet, Interjet had to assemble back a portion of its 22 Russian-made planes and use them on commercial flights. In the end, it didnt matter: the airline folded anyway.

The airline also lost credibility among the flying public in Mexico. Many travelers receive travel vouchers that they havent been able to redeem or exchange for money.

Many of Interjets former employees have found new jobs, other carriers have taken the domestic and international market share left by the ceased low-cost operator.

If Interjet ever finds a way to bounce back, it wouldnt be the same. It would have to begin from scratch; nonetheless, that plan looks pretty far-fetched at the moment.

Do you think Interjet could have an opportunity to fly again? Let us know in the comments below.

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Interjet Appoints A New CEO What Does It Mean For The Carrier? - Simple Flying

Farmer leader Anil Ghanwat, a member of the panel set up by the Supreme Court to study the three farm laws, said the demand to extend minimum support price to 23 crops, if agreed to, will drive the country to bankruptcy.

While the Centre has announced its decision to withdraw the three farm laws, farmers in Delhi are unwilling to end their strike before those are formally withdrawn and their demand on MSP is met.

"Whoever pays for it (MSP), the Centre or the state, will go bankrupt soon," Shetkari Sanghatana leader Ghanwat told ET. "This is a very dangerous demand and is not sustainable. If agreed to, then within two years the country would go bankrupt."

The farmer leader said the government also doesn't have the infrastructure to procure the crops or sell them. "The country's buffer stock limit is currently 41 lakh tonnes, but the government has had to procure 110 lakh tonnes of wheat and paddy. The government does not have the capacity to store this much grains, so these are kept out in the open, getting wet in the rain and getting rotten. Imagine if we add some more crops to the MSP list. How would they procure it, where would they store?"

He added: "As per my knowledge, no country does this; they give subsidies but not MSP and definitely not for so many crops. The farmers are not going to relent now easily because they feel that they have managed to get the government to bend to their demands on the three farm laws, so the government will also yield on the MSP. This is now the government's baby, they have brought it on themselves."

Ghanwat said a better alternative would be for the government to not intervene and bring down the prices of farm produce when they go up.

"The government starts importing as soon as the price rises domestically and also puts export limits. How will the farmer earn if the government keeps on bringing down the prices artificially? Importing and exporting should be the job of the traders and not the government," he said.

Excerpt from:

Assured MSP for 23 crops will drive the country to bankruptcy: SC panel member Anil Ghanwat - Economic Times

INTRODUCTION

Earlier the courts have to be approached for insolvency and winding up process under the Companies Act. Application had to be filed before the Company Law Board or Court for insolvent bank to wind up. Later on came the RDBD and SARFAESI Courts for winding up. In order to avoid such overlapping of laws, Insolvency and Bankruptcy Code, 2016 (IBC) came into existence. This Code combines collections of existing laws which are amended in order to form a single Code.

IBC was established with the aim of consolidating and amending the laws for reorganization of the process of insolvency for corporate persons. Partnership firms and individuals in a limited time frame so that the maximum value of assets is ascertained. This will not only result in promoting entrepreneurship but also help in setting up of a legal framework for timely resolution of insolvency and bankruptcy supporting development of credit markets and encouraging entrepreneurship.

In order to achieve these objectives as given under the Preamble of IBC, a distinct feature of this Code is the Corporate Insolvency Resolution Process (CIRP), which shall be discussed in detail in this article.

OBJECTIVES

Too many laws for recovery of Non-Performing Assets (NPAs) were introduced like the Companies Act, RDBD, SARFAESI, etc. In order to avoid clash between too many authorities for one single process, a consolidated and universal code was passed. DRTs were also not less in number, still there was immense delay in cases because a resolution process has to end in specific time. IBC gives time bound conclusions which is of specific importance. Also that there were many regulatory authorities for winding up procedure, therefore, one Insolvency and Bankruptcy Code Board of India (IBCBI) was formed.

When a company, consisting of around five banks, gives credit to the borrower, right of both the parties have to be protected. Rights of bank were highlighted under IBC along with the Insolvency Resolution Process (IRP). Under this Code, the DRT is approached when any individual or partnership firm is the borrower, whereas, NCLT is approached when company or LLP is a borrower.

Court will appoint an Interim Insolvency Resolution Professional (IIRP) when the creditors want a resolution plan to be made for the borrower. Then the valuation of assets, liabilities and creditors claim is made. If 66% of the creditors vote in favour of the Resolution plan, then it is deemed to have passed. Therefore the company shall revive as a going concern as it is actually given in the hands of the creditors. However if this does not work, then the company shall undergo liquidation.

CORPORATE INSOLVENCY RESOLUTION PROCESS (CIRP)

The structure of the IBC has been divided into 5 parts. Part 1 is Preliminary. Part 2 is Insolvency Resolution Process and Liquidation for Corporate purpose. Part 3 is Insolvency Resolution Process and Bankruptcy for individuals and partnership. Part 4 is Regulation of insolvency professionals. Part 5 is Miscellaneous. Initiation of CIRP takes place under Section 7 by financial creditors, under Section 9 by operational creditors, under section 10 by financial creditors. There are people who are not authorized to make an application for initiating CIRP. This is illustrated under Section 11 of the IBC. Moreover, the Insolvency Resolution Process involves undergoing 9 different stages.

Stage 1 is the commitment of default wherein the creditors shall be given the right to present their claims which need to be recovered.

Stage 2 is the one wherein application with adjudicating authority has to be filed. Financial creditors, operational creditors, corporate debtors, itself file their own applications respectively wherein obviously liabilities are greater than assets of the companies. Such applications are filed to the bank who is the financial creditor. Since the bank provides finance to all then it can initiate the insolvency process by filing of the application in the DRT or the NCLT accordingly. Bank is at its discretion to either file single application or jointly on behalf of all the claimant. Record of the defaulter with evidence is presented along with the name of the Resolution Process (RP) or any other information that is required. It has to be ascertained within 14 days whether there is any default existing or not. After 14 days, such a decision shall be passed by the adjudicating authority. In case the application is rejected and the default is not accrued, appeal shall lie in the NCLT against this action. Once this is accepted, the insolvency resolution process (IRP) starts. All the communication shall then take place from the adjudicating authoritys end only.

Stage 3 is the appointment of IRP. The time period for completion of resolution process is fixed at 180 days. In case this is not complied with, then application shall be filed for extension up to further 90 days only, after which no such extension shall be granted. If still it is not resolved, then no majority decision shall be deemed to have been passed on resolution plan. Moratorium shall then take place then giving legal authorization to debtors for postponing the payment on temporary basis. Such declaration shall be made by the adjudicating authority that during such working period no person having any claim against the corporate debtor can be sued. NCLT cannot be approached during such moratorium. Corporate Resolution Process is deemed to have been started at this stage. All the claims arising shall be submitted to the IRP appointed. Public announcement for the claiming parties will also be made. Powers of an IRP is given under Section 17 of the IBC. He basically acts as a mediator who is managing this process.

Stage 4 is the formation of the Committee of Creditors (CoC) which clubbed with Stage 5 of confirmation by CoC of appointment. The IRP is entitled to select claimants for the formation of CoC. The claims against debtors are submitted by filing applications on behalf of the creditors. Financial creditors are bestowed with the right to vote in the CoC. A resolution plan will then be made within 180 days extendable up to 90 days. Every voters count shall be in proportion with its share in the company. 66% of voting is necessary. In case some people feel that the IRP appointed is biased then some other IRP can also be appointed for which 66% voting shall again be required.

Stage 6 is the preparation of information memorandum by IRP. Relevant information in physical or electronic form is given in the information memorandum. This also determines the financial position of the corporate debtor.

Stage 7 is the proposition of resolution plan by the creditor. Such a plan made by the creditors and submitted to IRP on the basis of the information memorandum. Resolution Plan will then be examined and costing will be ascertained.

Stage 8 is resolution plan approved by creditor. After examining the resolution plan, approval will be taken by the CoC. Such plan will then have to be passed by majority not less than 66% of the voting shares. The process till here will have to be concluded in 180 days extendable up to further 90 days.

Stage 9 is of the resolution plan approved by adjudicating authority or liquidation. The plan so approved will be submitted to the adjudicating authority by meeting all the necessary requirements. The approval of adjudicating authority is equally important and necessary once the plan is approved by CoC. With this said, the moratorium period will come to an end. Further appeal can be made in the NCLAT or simply the process of liquidation shall be undergone then.

CONCLUSION

The main reason behind the growth of an economy is its money market. IBC was formed for a more precise and clearing of outstanding claims within the limited time frame. Even though this statute is still developing and the people are not much aware about the CIRP process and how easy it is. It is to be noted that application to initiate CIRP should be under the guide of prescribed forms in proper and completed manner. NCLT Rule, 2016 should be followed in that regard.

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Initiation of the CIRP process under the Insolvency and Bankruptcy Code - Lexology

John Blanchfield| Guest columnist

Reading about the recent passing of Professor Neil Harl caused me to reflect back on my 40 years in agricultural banking, 25spent at the American Bankers Association in Washington. While Professor Harls obituary mentioned his involvement in the farm debt crisis of the 1980s, it failed to mention what was perhaps his most lasting achievement, creation by Congress in 1986 of a special chapter of bankruptcy for family farmers know as Chapter 12.

Professor Harl created the intellectual framework that allowed members of Congress to envision how such a provision could work. He recognized early on that farmers, after being hit by a triple whammy in the early 1980s; high interest rates, the resulting collapse of farm asset values, and the collapse of commodity prices following the Russian Grain Embargo in 1980, that many of them had more debt than they could ever repay. Farmers who were going out of business in the Heartland at an alarming rate. Farmers were committing suicide. Open conflict developed between farmers and their bankers, and in some cases bankers were murdered. A full-blown crisis had developed.

More: Wendy Wintersteen: Neil Harl's distinctive voice will echo at Iowa State

More: Neil Harl, ISU economist and lawyer who pushed to save farms during 1980s crisis, dies at 88

Being an attorney, Professor Harl was very aware that large businesses were able to reorganize their operations by utilizing Chapter 11 of the US Bankruptcy code. By reorganizing, they were able to get debt written off, repayment terms lengthened, and in some cases interest rates lowered. Many businesses during the 1970s and 1980s successfully used Chapter 11, or the threat of filing bankruptcy to bring their creditors and their suppliers to the table to negotiate a reorganization plan. Chrysler was perhaps the most famous example at the time with a threat to go into bankruptcy in 1979 resulting in federal assistance that helped them continue as a going concern.

While farmers at the time had the option of filing Chapter 11 bankruptcy, Professor Harl and others recognized that it was far too expensive and far too time consuming for a family farmer to successfully reorganize under Chapter 11. He came up with the idea of a special chapter of the US Bankruptcy code specifically for family farmers (family fishermen were included in the enabling legislation).

Features of the legislation included a lower cost of filing, a court appointed trustee, a promise of a rapid turnaround, a requirement that those filing were indeed family farmers as evidenced by a cap on total debt and how much debt came from their farming operation. The most potent feature of the legislation was a cramdown provision that allowed the farmer to argue, in court, what the current market value of the farm was and if that number was lower than the debt owed against it, the court had the power to order the unsecured portion of the debt to be written off.

Understandably the cramdown provision was the bone that stuck in the throats of all those who had loaned money to farmers that was secured by their real estate. Despite the objection of the banking industry, Congress pushed ahead with the legislation and it went into effect on Nov.26, 1986. Over the years Chapter 12 has been expanded. In addition, Chapter 12 was supposed to sunset at a particular date, but that too was removed, and 35years after enactment Chapter 12 is still on the books.

Chapter 12 never lived up to the hype that surrounded it when it was debated and when it became law. It did help some farmers successfully reorganize and continue farming. But the promise that it would get farmers into and out of Bankruptcy Court quickly never materialized. On the bankersside, the cramdown provision did result in some real losses. As a result, Chapter 12 might have made it harder for some farmers to get credit because some bankers were loath to consider deals that were less than perfect. But over time, bankers overcame their fears and today the banking industry has over 50% of the farm credit market.

So, given the uneven success that Chapter 12 has had, why were Professor Harls contributions so pivotal in helping to settle the farm credit crisis of the 1980s? With the creation of Chapter 12, farmers and their lenders were driven to seek solutions before and/or without going to court. The existence of Chapter 12 brought both parties to the table. These table top bankruptcies enabled bankers and their customers to come to terms knowing that failure to do so would end up with both parties in court, with the knowledge that Chapter 12 was a huge pain to deal with. Shortly after Chapter 12 was enacted, the USDA, Farmers Home Administration began voluntarily writing down debt that was uncollectable. While lender losses were great at the time, Professor Harls contribution was that he unblocked the farm debt logjam. By finally coming to terms with the fact that much farm debt from that period was uncollectable, the agricultural credit system thawed and the farm economy recovered.

Finally, Professor Harl was instrumental in de-stigmatizing farm bankruptcy. The literature of the 1980s farm debt crisis in filled with stories about farmer suicides and banker killings. By removing the stigma of business reorganization, many farmers were able to successfully continue their operations or, at least, exit from farming with something. In either case, lives were saved and for that we owe a huge debt to Neil E. Harl.

John Blanchfield directed the Center for Agricultural and Rural Banking at the American Bankers Association in Washington, DC for 25 years.

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Opinion: In appreciation of Neil E. Harl making farm credit work for everybody - Ames Tribune

Riverbed Technology has filed for Chapter 11 bankruptcy protection with a view to implementing a "prepackaged" financial restructuring plan to eliminate debts of $1.1bn following struggles caused by the pandemic.

The SD-WAN and WAN optimisation biz first signalled intent to enter into a Restructuring Support Agreement last month, which it said is fully supported by all its voting lenders, as well as private equity majority owners, Thoma Bravo LLP and Ontario Teachers' Pension Plan (OTPP).

In court papers [PDF] lodged with the US Bankruptcy Court for the District of Delaware, Riverbed president and CEO Dan Smoot said the "best option" is to "right-size its capital structure and position itself for long-term success."

"Like many similar businesses, Riverbed faced significant COVID-19 related headwinds in 2020, including global supply chain disruptions and labor shortages, which adversely affected Riverbed's financial performance," said Smoot in supporting document [PDF]. "With factories shut down and stay-at-home orders instituted across the globe, Riverbed faced challenges maintaining its global supply chain as well as driving sales through a suddenly fully remote salesforce."

The limitations caused by the pandemic and debt obligations it was bought by Thoma Bravo and OTPP at the end of 2014 for around $3.6bn "significantly constrained liquidity through 2020," the CEO added.

"Compounding these challenges, one of Riverbed's key markets the wide area network optimization market has experienced a general decline in recent years as part of a transition by organizations to alternative location-independent computing technologies."

The business, which employs 1,400 staff and sells to more than 30,000 customers, said the "sustained decrease in workforce participation and declined demand during the pandemic for Riverbed's products and services" kept the pressure on liquidity, leading to the exploration of efforts to reduce its debts to its owners.

"After extensive, arm's length negotiations, Riverbed and these key stakeholders (First and Second Lien lenders and equity sponsors) reached agreement on the comprehensive deleveraging and liquidity enhancing transactions set forth in the structuring support agreement."

Riverbed will halve its $2bn debt through the financial restructuring, according to reports. Debt equity control will be passed to junior lenders and senior loan notes will be converted into new debts and preferred equity, the court filing states.

The financial arrangement will provide Riverbed with an additional $35m "cash infusion." General unsecured claims including trade, vendor, and employee claims will be "unimpaired and reinstated," the court papers say.

In a press statement, Smoot said:

Apollo Partner Chris Lahoud said: "We are pleased to continue our long-term support of Riverbed in this next chapter as they strengthen their financial position to deliver leading performance and visibility solutions to companies around the world.

"Riverbed has an exceptional team and strong market opportunities, and we are confident in their strategy to deliver innovative customer solutions and long-term profitable growth."

Continue reading here:

Riverbed Technologies files for Chapter 11 bankruptcy protection following pandemic 'headwinds' - The Register

CSA, the Czech flag carrier, has lost 105 million Czech Crown ($4.6 million) in the first nine months of the year. However, it is making sufficient progress in paying off its debts, and so it will remain in the process of business restructuring and will not be declared bankrupt.

The insolvency administrator of CSA announced that he was satisfied with the financial state of the Czech flag carrier in a report seen by Simple Flying.

CSA will remain in the process of business restructuring and will not enter bankruptcy. This is because it generated sufficient revenue so far this year to pay off its liabilities in full and in time.

The Czech flag carrier generated sales revenue amounting to 522 million Czech Crown ($23.2 million) between January and September 2021.

Furthermore, the airline bolstered its liquidity in the same time period by selling what the report calls surplus assets. Most notably, CSA sold its emissions permits in what was the most lucrative surplus asset sale of this time period.

As a result, the insolvency administrator expressed the view that there were no grounds on which to turn the business restructuring into bankruptcy by closing down the business. This means that CSA will continue to carry passengers, at least in the short term.

Despite the good news about escaping bankruptcy, the financial standing of CSA remains poor, and this remains a cause for concern regarding its future.

CSA is in the process of business restructuring led by INSKOL, a Czech public trading company whose scope of business is to perform the duties of the insolvency administrator in accordance with national law.

The net profit generated between January and September 2021 remains a negative figure: the total loss recorded during these nine months was 112.8 million Czech Crown ($5.5 million).

CSA was able to settle its receivables as scheduled, despite the negative financial result at the end of the year. The airline has also canceled its Airbus orders. Still, further problems for the airline remain ahead.

The solvency administrator did not conclusively state the level of support among CSAs creditors for its ongoing proceedings at the airline. This is because the reorganization plan has still not been submitted.

CSAs creditors, including ticket holders who have had their flights canceled and have not received a refund, are represented by a Creditors Committee. The Committee has met with the insolvency administrator as many as eight times in the third quarter of this year alone (between July and September 2021).

What do you think of the news that CSA will continue to operate while being in the process of business reorganization? Do you think the airline will live to be 100 years old later this decade? Let us know what you think of this story in the comments below.

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Czech Airlines Reorganization Will Not Turn Into Bankruptcy - Simple Flying