Monthly Archives: February 2022

Owning a restaurant is like being the captain of a ship. You have to worry not only about the state of the ship itself but the seas. Over the past two years, the COVID-19 pandemic has been responsible for the most unpredictable seas in decades. Between full closures, partial openings, back to full closures, then literally who knows what, many restaurant owners have run their ship into the rocks and many more will follow over the next weeks and months.

While the goal should always be to support restaurants in our home communities to the best of our ability especially mom and pop small food businesses even with our best efforts, sometimes the burden of keeping the restaurant open is just too much. Close to 100,000 restaurants have closed in the United States since the pandemic began, which is 15 percent of all restaurants a number that has sent the entire industry reeling.

So, what happens when a restaurant closes its doors? Michele Finizio, a New Jersey lawyer, explains the options a restaurant has if they choose to file for bankruptcy. Assuming the restaurant is actually operating legally, the owners could choose to declare bankruptcy. If they do, they have three options: Chapter 7, Chapter 11, or Chapter 13 bankruptcy. Each comes with certain advantages for the party filing.

In Chapter 7 bankruptcy, the restaurant would close and the bankruptcy court in the relevant jurisdiction (there are close to 100 bankruptcy jurisdictions in the United States) determines which of the creditors gets what. There is never enough to go around, so the courts job is to essentially prioritize assets and creditors. The first ones paid are sometimes the only ones paid and usually not in full.

The second option is called Chapter 11 bankruptcy. That is a type of bankruptcy that is favored by restaurants where they see a path to success on the horizon but need breathing room to reorganize the business. The business is allowed to continue, debts are reorganized and sometimes consolidated in a plan that is submitted to the court. The restaurant is allowed to continue to exist as long as the court accepts their plan, even if it doesnt result in all of the debts being paid off. Usually, the restaurant has to sell off some assets to be able to pay back debts, so Chapter 11 may not be ideal for a mom-and-pop food business.

Finally, for a Chapter 13 bankruptcy, the restaurant works with its creditors to renegotiate payments. This is the path a good number of restaurants have taken since the pandemic. It is ideal for a food business that was profitable before the pandemic, has experienced really hard times since mid-2020 (perhaps with a few breaks and a return to a more normal business) but now sees a path back to the way things once were.

No matter the legal path a restaurant chooses to take, the larger issue for all of us is that the vast majority of the restaurants that close simply wont be in a position to re-open. This hurts the economy writ large but most profoundly affects our local communities. Small food businesses not only support the families that own them seen collectively, but they are also an important group of employers throughout the nation.

The rest is here:

Is It Too Late to Save More Restaurants From Bankruptcy? InsideSources - InsideSources

The corporate affairs ministry is set to propose amendments to the Insolvency and Bankruptcy Code (IBC), based on recommendations made by a parliamentary panel, in the budget session of Parliament, according to a person familiar with the development.

The draft bill to amend IBC, which has to be first cleared by the Union cabinet, seeks to reduce the time between filing a bankruptcy petition and its admission in tribunals, speed up the approval of corporate rescue plans, and maximize the value of assets available for restructuring. The budget session of Parliament, currently on a break, will resume by mid-March and continue till the second week of April.

In case of a procedural delay in tabling the bill in the budget session, the government has the option of making the changes through an ordinance, without waiting for the Parliaments monsoon session, the person cited above said seeking anonymity.

The bill also seeks to add a new chapter on cross-border bankruptcy resolution to the IBC, filling a major gap in the current regime.

The effort (in framing the bill) has been to address most concerns raised by the Parliamentary standing committee in the best possible way. Making the law is one thing. Its implementation and development of the ecosystem are other issues. Vacancies in the National Company Law Tribunal benches are also being filled," the person said.

The proposed amendments seek to address the concerns raised by the parliamentary panel led by Lok Sabha MP Jayant Sinha in August. The panel expressed concern about the steep haircuts taken by lenders in some cases and delays beyond six months in stitching together resolution plans in many cases.

The bill also incorporates feedback from two rounds of public consultations. It seeks to empower bankruptcy resolution professionals hired by lenders to run distressed companies to review the past conduct of the distressed company and take corrective steps to protect the interests of stakeholders.

According to the proposal, past transactions starting from the bankruptcy filing date, rather than the admission of bankruptcy, will come under the company administrators review. The idea is to prevent a delay in the admission of a bankruptcy case from causing value erosion because significant pre-bankruptcy deals are out of the review ambit.

The current law allows resolution professionals to approach tribunals to annul a transaction of a bankrupt company dating back up to two years from the date of admission in the case of related-party transactions and up to one year in the case of others.

Queries emailed to a corporate affairs ministry spokesperson on Saturday for comments remained unanswered till the time of publishing.

The application of the look-back period from the date of filing the bankruptcy application increases the period under audit to identify preferential or undervalued transactions, and thus increases the scrutiny to identify any wilful default," said Divakar Vijayasarathy, founder and managing partner of consultant DVS Advisors LLP.

Experts also pointed out that ensuring quick admission of cases would go a long way in meeting the goals of IBC.

The institutional framework for bankruptcy resolution must be efficient, and decisions have to be taken in a timely manner. The efforts to rescue companies in distress will fail if tribunals take a long time to admit cases," said Anoop Rawat, partner, insolvency and bankruptcy, Shardul Amarchand Mangaldas and Co., a law firm. In many instances, cases were admitted more than a year after the bankruptcy filing, said Rawat, adding that ensuring that the ecosystem has sufficient bench strength is also vital.

One of the proposals by the government panel that formed the basis of the proposed amendments was that the corporate rescue plan has to be cleared by the National Company Law Tribunal within 30 days. This, according to Vijayasarathy, would ensure faster resolution and makes it difficult for the promoters to carry out any preferred transaction.

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Bankruptcy resolution shifting to fast track - Mint

Manila: During the toughest stages of the pandemic, a Philippine Airlines (PAL) pilot Jimmy* was grounded for months.

Initially, he was involved in the repatriation of Filipinos from different countries. At the end of 2020, the Philippine's flag-carrier reported a massive loss amounting to $-1.4 billion.

Strict travel curbs rapidly taken by countries tolimit the spread of the pandemic dealt a huge blow to most airlines.

To keep himself busy, Jimmy helped in his familys rice mill and trading business. Now, with the Philippines borders reopened, Jimmy is back in the skies flying. His journey is emblematic of what happened to the country's 81-year-old carrier.

Faced with pandemic-induced financial turbulence, PAL filed for Chapter 11 on September 3, 2021 with the US Bankruptcy Court for the Southern District of New York. The court granted the request.

However, its Chapter 11 filing and subsequent court approval, did not mean PAL faced a shutdown. It kept operating domestic and limited international (repatriation) flights.

It was allowed to reorganise to carry out its rehabilitation plan with the aim of paying creditors over a period of time.

Whats the airlines financial standing during the pandemic?

In an end-September report to the bankruptcy court, PAL Chief Financial Officer Nilo Thaddeus Rodriguez showed the airline had a gross income of $91.75 million for the month and loss of $29.56 million (Php1.5 billion).

In getting its Chapter 11 filing approved, PAL got a breathe of fresh air, giving it time to restructure on the hope that the pandemic restrictions would ease.

What is Chapter 11 bankruptcy protection?

Chapter 11 of the Bankruptcy Code permits reorganisation under the US bankruptcy laws. During a Chapter 11 bankruptcy, businesses usually retain possession and control of their assets under the supervision of a bankruptcy court.

Filing for Chapter 11 suspends all judgments, collection activities, foreclosures, and repossessions of property against the filing business.

4.5 billion passengers

As governments around the world imposed lockdowns and restricted cross-border travel to curb the spread of COVID-19, airlines were among the hardest-hit.

The International Air Transport Association (IATA) estimates airlines around the world lost about $52 billion in 2021, after incurring about $138 billion in losses in 2020.

What did PALs Chapter 11 bankruptcy process entail?

Usually, a case filed under Chapter 11 means the debtor remains in possession has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money.

As part of the process, Philippine Airlines presented the bankruptcy court a restructuring plan, which the court subsequently approved. The plan called for the following:

What were the major drivers in its exit strategy from Chapter 11 process?

There were three engines that helped it achieve successful restructuring: court approval, agreement by creditors and its ramped up operations.

First, the court approval to slash debts by more than $2 billion was pivotal to the success of its restructuring plan. It helped positioning the flag carrier for a recovery from its pandemic-induced losses.

Second, the consensual restructuring plan meant that it was accepted by 100% of the votes cast by its primary aircraft lessors and lenders, original equipment manufacturers (OEMs) and maintenance, repair, and overhaul service providers, and certain funded debt lenders.

Third, even as it was going through financial restructuring process to which stakeholders agreed its flights continued uninterrupted. It honoured tickets, vouchers and its loyalty programme (Mabuhay Miles).

As travel restrictions eased, it ramped up its operations. By the end of 2021, as travel restrictions were eased, PAL virtually emerged from its Chapter 11 bankruptcy process.

In short, the process enabled PAL to remain the flag carrier of the Philippines and the countrys premier global airline, able to sustain its 80-year history of providing the Philippines vital links to the world.

What do airlines numbers show?

On January 18, 2022, PAL filed results of its December operations in a report provided by the airlines claims agent Kurtzman Carson Consultants LLC.

It showed that four months after filing for Chapter 11 bankruptcy protection, PAL swung into profitability, with 1.7 billion pesos profit ($32.97 million) in December 2021.

It reversed a loss of $11.67 million incurred in November. Rodriguez, the airlines CFO, reported to the court that the airline had a gross income of $183.82 million for December, up 28.1% from $143.48 million earned in November.

In terms of break-down, PALs passenger revenue grew 37.7% to $132.27 million in December from $96.09 million in November, while cargo revenue declined by 4% to $42.27 million from $44.04 million previously. Ancillary revenue increased 57.5% to $6.74 million from $4.28 million in November.

When did PAL start?

PAL started nearly 81 years ago.

The flag carrier of the Philippines is the countrys only full-service network airline. PAL was the first commercial airline in Asia. It is marking its 81st anniversary next month (March 2022). It was ranked the 30th best airline in the world in 2019.

Is PAL Holdings Inc. covered by the Chapter 11 filing?

No. During restructuring, PAL has stated that business operations will continue as usual. PAL Holdings Inc., the holding company of PAL, and Air Philippines Corp, known as PAL Express, are not included in the Chapter 11 filing.

Who controls PAL?

The airline is majority-owned by a holding company, known as PAL Holdings, controlled by Filipino billionaire Lucio Tan, 87.

With a net worth of $1.9 billion (list published in September 2021), Tan emerged as PALs controlling shareholder in 1995 when he was appointed chairman. He regained control of PAL in in 2014 after buying San Miguel Corp.s controlling interest in the airline. His business empire spans banking, property, tobacco andbeverages.

Who is at the helm of the airline?

In January this year, PAL announced that its senior vice-president for operations, Capt. Stanley K. Ng, was appointed as its new president and chief operating officer (COO), in an acting or officer-in-charge capacity, replacing Gilbert F. Santa Maria.

Does that mean PAL is out of Chapter 11 process?

The airline states it had successfully completed its financial restructuring within four months. In contrast, other airlines remained in the Chapter 11 process more than a year after filing in 2020. The airline has set its sights on restoring more routes and ramp up flight frequencies as more travel restrictions are lifted.

It seeks to resume regular flights to multiple cities in mainland China, full regularisation of flights to Australia and the commencement of new services to Israel.

The company projects that it will generate an operating income of $220 million by end-2022 and $364 million in 2023.

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Philippine Airlines soars from brink of bankruptcy to profitability: how it happened - Gulf News

Welcome to your weekly update from the Allen & Overy Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.

This week we cover topics including: Dashboards: draft rules for FCA-regulated pension providers; High Court: EU pensions protected on bankruptcy; Tribunal: no reasonable excuse for AE non-compliance; Final regulations on changes to trust registration requirements.

The Financial Conduct Authority (FCA) has published a consultation on proposed rules for personal and stakeholder pension providers on supplying information to pensions dashboards. The consultation closes on 8 April 2022. This runs alongside a government consultation on draft regulations for occupational pension schemes launched earlier this month. The FCA is aiming to publish its Policy Statement and finalised Handbook rules in autumn 2022, alongside or shortly after parliament approves the governments regulations.

Read the consultation.

The High Court has ruled that, contrary to UK legislation, rights in pension schemes recognised for tax purposes in an EU member state are protected in UK bankruptcy proceedings: Wilson and another v McNamara and others. However, the court has left this open to future challenge.

The case involved an Irish citizen made bankrupt in England, with rights in an Irish pension scheme. Under UK legislation, rights in pension schemes registered under the UK Finance Act 2004 are excluded from the assets that can be recovered on bankruptcy. The case was referred to the European Court of Justice (ECJ) to decide whether the UK legislation was contrary to EU law (it was brought before the end of the Brexit transition period). The ECJ held, in November 2021, that the exemption placed migrant workers at a particular disadvantage because, broadly, most migrant workers would have their pension rights in schemes established outside the UK which would not in general be approved for tax purposes in the UK. Therefore, it found that the UK law is indirectly discriminatory, unless it could be found to be objectively justified and proportionate. It did not rule on whether there was objective justification, but said this was a matter for the UK court.

The most recent judgment dealt with whether the UK court should consider the question of justification. Lord Justice Nugee rejected the request to consider that point, as it was not one that had been raised previously, and it was not procedurally appropriate to raise it at this stage. Therefore, he decided that the bankruptcy exemption in the UK legislation should be read as including assets in a scheme established in another member state that was recognised for tax purposes. He did however leave the door open for a future case to consider whether there was objective justification for the UK legislation being limited to schemes registered in the UK.

Read the decision.

The First-tier Tribunal has considered three cases where employers claimed that they had not received reminders from The Pensions Regulator (TPR) in relation to auto-enrolment requirements, and therefore should not have been subject to fixed penalty notices for not meeting those requirements. In each case, the Tribunal found that there was no reasonable excuse for non-compliance.

The Tribunal noted that TPR did not have to prove that documents were delivered; there is a legislative presumption that if a document has been sent to a proper address, it has been received. The employer equally did not have to prove that the documents were not received; if there is strong evidence to the contrary, the presumption can be displaced, but in these cases no evidence had been provided to support this. In any case, employers are under an obligation to comply with the auto-enrolment requirements, and even if they did not receive the reminders, they were not relieved of that duty.

Read the cases: Skewer House Taunton Ltd v TPR, Condor Estates Ltd v TPR and Total Industrial Machines Ltd v TPR

Regulations making changes to the requirements for trusts to be registered with HMRCs Trust Registration Service have now been finalised and will come into force on 9 March 2022. The regulations make changes to the time limits for registration of taxable relevant trusts and exclude certain express trusts from the requirement to register (registered pension schemes are already excluded from needing to register). The exclusions now cover, for example, both a trust holding a life policy and a trust of the benefits payable under that policy, as well as the trust of a bank account holding funds for a minor.

Read the regulations.

The programme for our next Pensions Academy Online (an update on issues for pension schemes and the people who run them) is now available. Please see the list below.

Date Topic

7 March Money laundering and proceeds of crime what trustees need to know

8 March Pension Schemes Act 2021: new offences and notifiable events where are we now?

9 March Handling an investigation

10 March Legal update including transfers, dashboards, single code, superfunds and more

11 March Climate change governance and reporting theory and practice

Click here for more information or to register.

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Pensions: what's new this week February 2022 # 3 | Allen & Overy LLP - JDSupra - JD Supra

NEW YORK, Feb. 21, 2022 (GLOBE NEWSWIRE) -- A flurry of bankruptcy filings from senior-focused health care facilities has shaped the U.S. economic distress in the fourth quarter of 2021, which is detailed in the newest Polsinelli-TrBK Distress Indices Report.

The report, released today by Am Law 100 firm Polsinelli, explains how senior living-focused organizations, independent/assisted living communities and skilled nursing facilities represent a significant portion of the health care bankruptcy filings as health care begins its return to pre-pandemic numbers. These health care facilities are dealing with decreased patient census, increased operating costs, and significant pressure on staffing and labor costs.

We anticipate that the bankruptcy filing numbers will continue to increase, especially in the health care and real estate industries, as we enter 2022. We havent seen the end of COVID-19 yet and the massive federal assistance that has kept facilities afloat will end soon, said Polsinelli Shareholder Jeremy Johnson, a bankruptcy and restructuring attorney and co-author of the report.

The Polsinelli-TrBK Distress Indices are the backbone of a quarterly research report series that uses Chapter 11 filing data bankruptcies with more than $1 million in assets as a proxy for measuring financial distress in the overall U.S. economy and breakdowns of distress specifically in the real estate and health care services sectors.It is the only current measurement that tracks both Main Street and Wall Street statistics.

Other significant updates in the report include:

The Polsinelli-TrBK Distress Indices track the increase or decrease in all Chapter 11 filings with more than $1 million in assets since the fourth quarter of 2010. Unlike the public markets, the Polsinelli-TrBK Distress Indices include both public and private companies, creating a broader economic view and one that may show developing trends on Main Street before they appear on Wall Street.

To access the full report, graphs and all past analyses, visitwww.distressindex.com.

About Polsinelli

Polsinelli is an Am Law 100 firm with 950 attorneys in 21 offices nationwide. Recognized by legal research firm BTI Consulting as one of the top firms for excellent client service and client relationships, the firms attorneys provide value through practical legal counsel infused with business insight, and focus on health care, financial services, real estate, intellectual property, middle-market corporate, labor and employment and business litigation. Polsinelli PC, Polsinelli LLP in California.

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Senior Living Drives Health Care Industry Distress in Final Quarter of 2021 - GlobeNewswire

SINGAPORE - After six months of trying to pay back banks, moneylenders and creditors, Christine (not her real name) finally started bankruptcy proceedings over a huge debt. The 37-year-old Malaysian nurse working in Singapore is a victim of a pig-butchering scam.

This hybrid of romance and investment scams see fraudsters pretend to be a love interest to swindle unsuspecting partners.

With a total debt of $270,000 and no recourse, Christine attended a court hearing on Thursday (Feb 17) to declare bankruptcy.

"If possible, I wouldn't want to declare bankruptcy, but it's a better option for me now," said Christine, who is originally from Penang, Malaysia, breaking down in tears over the phone.

Having been apart from her family in Malaysia because of Covid-19 related travel restrictions, the loneliness drove her to seek companionship in a mystery stranger who sent her a direct message on Instagram.

The stranger claimed to be a 34-year-old Shanghainese interior designer, based in Vancouver, Canada.

A friendship quickly sparked, and they were soon talking daily via texts and voice calls.

He seemed legitimate enough, sharing pictures and videos from his daily life - whether it was pictures of his meals, or him skiing while on holiday.

"He kept saying to me 'why don't you find a partner, you don't want to end up stuck in an old folks' home alone without a family'," said Christine.

"I only wanted to remain as friends with him since he was a free-thinker... but when he gave in and said he would follow me to church, that's when I gave in too."

Three weeks into the conversation, he brought up investments.

She started off small, and eventually ended up investing US$5,000 (S$6,700) in the first month.

In the midst of it, she had lost $30,000 in a separate loan scam.

Her new love interest, who consoled her through this loss, suggested that she could make back the $30,000 "pretty easily", if she invested in his platform.

He even pumped $10,000 into her account to convince her.

He reeled her in further, promising to fly over from Vancouver in October, to make it in time for a surgical procedure for her heart that she had to undergo.

She pumped in around $150,000, borrowed via bank loans, in order to keep the investments rolling. He also helped her with purchasing and selling shares.

"When I saw the profits reaching the target of $30,000, I wanted to pull out because it was very stressful to keep borrowing money and making enough to pay it back with interest," she said.

"I even told him I wanted to break up," she said.

But the scammer threatened to take his life. "He said to me, 'Why are you leaving me? We've been through all this, we still have a long way to our future.'"

[[nid:531703]]

He also offered to resign from his job and move to Singapore, and get a permanent resident pass via his friend's company.

Convinced, she stayed on. The promise of the relationship also drove her to invest more money.

She funded this by going to moneylenders, and selling her car.

"I also managed to borrow from friends and family also saying it was for urgent use... They know my character and that I'd never borrowed money before," she said.

Taking out a mortgage on her house in Malaysia was the last resort.

In September last year - her last investment - she pumped in $70,000. At that point, she had invested a total of $240,000 on the platform.

It was her father who warned her about investment scams, telling her she needed to make sure she could withdraw her funds.

He sent her a link to an article on a Chinese website about pig-butchering scams, about a woman who had lost around $500,000.

When she read the article, she got a shock. It had photos of the same man she had been speaking to for the last four months.

The red flags started to make sense.

The investment platform she was on could be accessed only by a dedicated website and not via an established app or trading platform like Kraken, Gemini or Crypto.com

Also he did not want to do video calls with her. He said: "We have to keep some surprise for when I see you."

When she confronted him about it, he denied it and said he was disappointed with her accusation.

In a panic, she then tried to withdraw $140,000 she had in the account but was told by the customer service site that they did not have a merchant online that could do the transaction. She hit this wall several more times.

When she eventually got one online with his assistance, they told her that in order to withdraw such a large amount and for "safety purposes", she would have to top up the funds and invest a further $240,000.

Upon realising that her account was frozen, she found Singapore-based non-profit Global Anti-Scam Organisation (Gaso) online, which confirmed that she had been scammed. They advised her not to top up the funds.

Christine she hit her lowest point in September to December last year, when she contemplated suicide.

"Banks were calling me daily at work," she said. "I got so stressed when I was unable to pick up their calls."

[[nid:566991]]

Given the amount of money that she owed, she did not qualify for the Debt Repayment Scheme, which assists debtors with a regular income and debts not exceeding $150,000 to avoid bankruptcy.

In the last five months, she has attempted to pay back as much of her debts as possible, even taking up part-time jobs and working on her days off and public holidays.

However, her salary of around $4,000 a month is barely enough to cover the amount owed - $1,200 a month as part of a company loanand $1,000 a month to pay off moneylenders.

The rental for her current shared housing in a HDB flat takes up another $850 per month, while she pays $700 a month for a property in Penang.

This leaves her with all of $250 a month for any other expenses.

Her last contact with the scammer was in October last year, after which she made a police report.

However, she has no means of recouping her losses.

Christine hopes that by sharing her story, and the modus operandi of scammers, others will not make the same mistakes she made.

"It's a huge syndicate, it's hard to take them down... but (when I wanted to take my life) I realised what I can do is help create awareness," she said.

"That's the only reason that I'm still living. I don't want it to go to waste."

This article was first published in The Straits Times.Permission required for reproduction.

Link:

Months of debts, promises and guilt trips: Woman declares bankruptcy after $240k 'pig-butchering' scam - AsiaOne