Category Archives: Bankruptcy

On 1 November 2021, the Federal Decree Law No. 35 of 2021 (the "Decree") (amending certain provisions of the Federal Decree Law No.9 of 2016 concerning Bankruptcy (the "UAE Bankruptcy Law")) came into force. The publication of the Decree follows a significant decision relating to directors' duties by the Dubai Court of First Instance in the matter involving the bankruptcy of Marka Holdings PJSC ("Marka") (the "Marka Case").

In the Marka Case1, the Dubai Court of First Instance found the managers and the directors of Marka personally liable for the debts of Marka in an amount equal to approximately AED 450 million (which was close to the total amount of all the debts payable by Marka).

Prior to the publication of the Decree, the UAE Bankruptcy Law and the Federal Law No. (2) of 2015 concerning Commercial Companies (as amended) ("CCL") contained provisions relating to the potential personal liability of the members of the board of directors and managers of a company. In particular, such individuals were previously able to, subject to certain conditions, be held personally liable under the UAE Bankruptcy Law for payment of a company's debts if a UAE court deemed them to be responsible for that company's losses.2

The Marka Case may therefore seem to be consistent with the provisions of the UAE Bankruptcy Law prior to the publication of the Decree. Notwithstanding this, since the court's findings have been reported, the Marka Case has been viewed as a significant development in the UAE's approach towards personal liability in corporate bankruptcy proceedings. This is because (1) such an approach towards personal accountability does not appear to have been previously applied in practice by the UAE courts; and (2) the extent to which such personal liability was applied. Whilst it may be that the particular fact pattern is specific to the case and distinguishable going forward, nevertheless there has been a discernable market reaction to the outcome.

The Decree came into force shortly after the Marka Case. The amendments brought about by the Decree apply to Article 144 and Article 201 of the UAE Bankruptcy Law, specifically in relation to the liability of the directors and managers in a bankruptcy scenario. It is worth highlighting that the Decree itself does not provide for any significant standalone amendments to the UAE Bankruptcy Law save for clarifying the previous provisions relating to the personal liability of the directors and managers. The amendments include, amongst others, (1) clarification that each director or manager will be held liable to the extent of their responsibility for such debts; (2) providing the directors or managers held in contravention of the law the right to appeal the relevant ruling; and (3) further introducing a financial penalty for contravention of the relevant articles of an amount equal to no more than AED 100,000) (this is in addition to the criminal liability previously included in the law).

The timing of the enactment of the Decree to be read alongside the decision of the Marka Case can be seen as a key reminder to the market by the UAE Government of the existence of personal liability to senior officials in a company. Additionally, taken together, the Decree and the Marka Case reinforces the Government's aim to demonstrate and uphold "best practice" standards of corporate governance and accountability in the UAE, in order to continue to attract inward investment in the country.

The decision of the Marka Case may potentially be reversed following its appeal. Notwithstanding this, directors and managers (which, under the UAE Bankruptcy Law includes anyone who plays an active role in the decision making of a company) are now likely (if they are not already doing so) to more actively seek separate independent advice to ensure that decisions made on material transactions will not affect their personal liability following a bankruptcy or similar insolvency procedure.

The decision of the Marka Case is fairly recent and it is yet to be determined whether the decision will set a new approach towards personal liability in UAE corporate bankruptcy proceedings. The UAE legal system does not operate on the basis of binding precedent. As such, the legal ruling in this case, does not mean it would apply in all other cases. Nevertheless, directors and managers across the UAE will likely remain mindful of their duties under the relevant laws and ensure compliance.

1 Case #14/2019 Bankruptcy Procedures2 Article 144 and 201 of the UAE Bankruptcy Law and Article 162 of the CCL

[View source.]

Originally posted here:

Directors Duties: a stark reality following the recent Marka Ruling and subsequent amendments to the UAE Bankruptcy Law - JD Supra

As a property owner in North Conway, I am furious to see the money collected not being used for local resources that will help benefit the town in more positive ways.

As my family and I are considering moving permanently to North Conway to raise our kids, I have witnessed reckless spending of late and it appalls me that others are not furious as I am. For example: spending $50,000 on a list to determine the STRs in the area is sickening and robbery of the taxpayers' money. How many people would have preferred to see this money go to our schools for another teachers' salary raise or a school music program or fine arts program or even a robotics program?

The same list was generated for a fraction of the cost and was more accurate by others. So why was all of this money spent? Did the town obtain three estimates or just impulsively spend $50,000?

The town is looking at re-evaluating all properties in town to raise our assessed values and capitalize on this increased market. Legally, they do not need to do this for three more years but they are insisting on doing this now because they are in an economic pinch and bind with their reckless spending and legal fees. That means everyones taxes will be raised when there is no need to do this for three more years.

What I ask is that the people of this community dont act emotionally use logic and reason to decipher if you agree with all of this spending or if you would prefer to see the tax money generated go towards more local resources. The town is heading towards bankruptcy and its because of these poor decisions.

Dont let this happen! Voice your concerns. Dont stay quiet because youre going to regret not speaking up and questioning these people who are pushing an agenda and not looking at your best interests.

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Matt Collard: Because of poor spending decisions town is heading toward bankruptcy - Conway Daily Sun

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This week, the Ninth Circuit takes a close look at a sizableantitrust jury award, and explains what constitutes a taxreturn for purposes of bankruptcy law.

OPTRONIC TECHNOLOGIES, INC v. NINGBO SUNNY ELECTRONIC CO.LTD.

The Court held that sufficient evidence supported a jury verdictholding telescope manufacturers liable for antitrustviolations.

The panel: Judges Tashima, Gould, andRakoff (S.D.N.Y.), with Judge Gould writing the opinion.

Key highlight: The documentaryevidence and expert testimony that Orion presented during trial . .. showed that Sunny had the technical capacity to manufacture thesame telescopes as Synta, but chose not to. . . . Other emailsbetween Sunny and Synta indicate that they had agreed to dividecustomers. . . . This is quintessential evidence of a marketallocation conspiracy.

Background: Plaintiff OptronicTechnologies, Inc., also known as Orion Telescopes & Binoculars(Orion), designs and markets telescopes. Orion sueddefendants Ningbo Sunny Electronic Co., Ltd. and Sunny Optics,Inc., (collectively Sunny), manufacturers oftelescopes, for violations of federal antitrust law and Californialaws arising out of Sunny's alleged conspiracy with othertelescope manufacturers (Synta) in relation toSunny's acquisition of telescope manufacturer/distributorMeade, and other conduct. Before trial, the district court grantedpartial summary judgment to Sunny, holding that Orion lackedstanding to challenge Sunny's conduct on the ground that itprevented Orion from acquiring Meade, but holding that Orion maystill have been harmed by Sunny's acquisition of Meadebecause it concentrated the telescope market. After a trial, thejury found Sunny liable and awarded Orion $16.8 million in damages.The district court trebled the damages pursuant to the Clayton Act,and awarded Orion $50.4 million, but then deducted $3.1 millionbased on the value of a settlement and supply agreement Orion hadreached with Synta. The court refused to deduct the profits Orionderived from the supply agreement because Sunny had the burden ofproof and, the court concluded, the expert declaration it submittedto support this argument was untimely. The district court alsogranted Orion an injunction that ordered Sunny to supply Orion andMeade at non-discriminatory terms for five years; and notcommunicate with Synta to the extent such communication violatedfederal antitrust law.

Result:The Ninth Circuit vacated onlywith regard to the valuation of the settlement set-off, which wasremanded for further proceedings, and affirmed in all otherrespects.

The Court first rejected Sunny's challenges to thedistrict court's evidentiary rulings as toexpertsholding that the testimony of Orion's telescopemanufacturing expert and damages expert was properly admitted, andthe testimony of one of Sunny's proposed rebuttal experts wasproperly excluded. The Court further held that the districtcourt's mid-trial curative instruction limiting thejury's consideration of the testimony of one of Sunny'srebuttal witnesses was proper.

The Court also upheld that jury's verdict as based onsufficient evidence. The Court thus rejected Sunny's argumentthat Orion failed to present sufficient evidence to support thejury's verdict in Orion's favor on its Sherman Act1 claim. The Court explained that the elements of aSection 1 claim are: (1) a contract, combination, or conspiracy (2)that unreasonably restrained trade under either a per se rule ofillegality or a rule of reason analysis, and (3) that the restraintaffected interstate commerce. The Court noted that horizontal pricefixing and market allocation are per se Section 1 violations.Contrary to Sunny's argument, Orion had presented sufficientevidence that Sunny conspired with horizontal competitor Synta toensure that Sunny acquired Meade to protect their market share andguarantee that a competitor would not buy Meade. Orion alsopresented sufficient evidence from which the jury could properlyfind, as it alternatively did, that Sunny conspired with acompetitor to fix prices and credit terms. And Orion presentedsubstantial evidence to support the jury's verdict that Sunnyagreed with Synta, a horizontal competitor, either not to competewith one another in the market, or to divide customers or potentialcustomers between themanother per se Section 1violation.

The Court also rejected Sunny's challenge to thejury's verdict in favor of Orion on its Sherman Act2 claim. The court explained that Section 2 makes itillegal to monopolize, or attempt to monopolize, or combineor conspire with any other person or persons, to monopolize anypart of the trade or commerce. The jury could have foundthat Sunny and Synta intended for Sunny to have a monopoly over thetelescope manufacturing market, and thus the jury's verdictdid not depend on an impermissibly joint monopoly theory. And Orionhad not failed to define the relevant market, but insteadestablished the relevant market through expert testimony. Likewise,sufficient evidence supported the jury's finding that Sunnyexpressed a specific intent to gain monopoly power. Finally, Orionalso presented sufficient evidence to establish that Sunny wasdangerously close to attaining monopoly power. The evidence Orionpresented at trial established that Sunny's market share wasabove the forty-four percent market the Court has recognized assufficient to establish a dangerous proximity to market power atthe relevant time and there had been no new entrants to thetelescope manufacturing market for ten years.

The Court also denied Sunny's request for a new trial onOrion's Clayton Act 7 claim on the ground thatOrion had not proved damages from this violation as required. Onthis claim, the jury found Sunny violated Clayton Act 7because there was a reasonable likelihood that Sunny'sacquisition of Meade would substantially reduce competition in thetelescope manufacturing market or create a monopoly. Orion hadpresented evidence of antitrust injury on this claim on the theorythat Sunny's acquisition of Meade reduced the number of majortelescope manufacturers from three to two, enabling Sunny and itscompetitors to charge supracompetitive prices for telescopes, whichwas a major factor in the overcharges that Orion experienced in itsbusiness dealings with Sunny, Synta, and Meade.

The Court also concluded that the injunctive relief granted bythe district court was not overbroad. The Court stressed that adistrict court may order an injunction beyond a simple proscriptionagainst the precise conduct previously pursued and that thereviewing court asks only if the relief is a reasonable method ofeliminating the consequences of the illegal conduct. In particular,the district court validly ordered Sunny to supply Meade onnon-discriminatory terms because the telescope manufacturing marketwould become over-concentrated if Sunny eliminated Meade. And thedistrict court properly ordered Sunny to supply Orion even thoughit had earlier dismissed Orion's refusal-to-deal claimbecause the district court can order conduct to avoid a recurrenceof the antitrust violation and eliminate its consequences and here,the jury had found that Orion had been forced to pay inflatedprices as a result of the market power exerted by Sunny and Syntafollowing the unlawful Meade acquisition.

The Court also disagreed that Orion could not receive damagesarising after September 2016, when Sunny contended any conspiracymust have ended, because Orion offered substantial evidence thatthe conspiracy had continued after 2016 because although Synta hadat that point agreed to supply Orion on most favored customerterms, it actually kept overcharging Orion. And even if theconspiracy had ended in 2016, Orion could recover post-2016 damagesbecause it continued to suffer economic harm from the harm tocompetition caused by the illegal concerted activity. TheCourt found, however, that the district court had abused itsdiscretion in excluding a declaration of Sunny's expert insupport of Sunny's post-trial motion to alter or amend thejudgment as untimely disclosed because the expert had been timelydisclosed. The Court accordingly remanded for the district court toreconsider whether to accept the expert's declaration.

Turning to Orion's cross-appeal challenging the districtcourt's entry of summary judgment for Sunny on the issue ofwhether Sunny caused Orion's failure to acquire Meade, theCourt again affirmed. The Court explained that Orion did not haveantitrust standing to raise the issue because the timing of bidscreated a strong presumption that Orion would not have acquiredMeade even if Sunny had not outbid another competitor for Meade andthus there was no genuine dispute of material fact on whether Sunnyprevented Orion from buying Meade.

RUDOLF SIENEGA V. STATE OF CALIFORNIA FTB

The Court holds that a Chapter 7 debtor's state tax debtswere non-dischargeable where the debtor notified the CaliforniaFranchise Tax Board of a federal tax adjustment, but did not paystate taxes.

The panel: Chief Judge Thomas, andJudges McKeown and Molloy (D. Mont.), withChief Judge Thomas writing the opinion.

Key highlight: [T]he [BankruptcyAppellate Panel] correctly concluded that sending faxes was not theequivalent of paying taxes. Therefore, it properly affirmed theholding of the bankruptcy court that the California state taxesthat Sienega owed were nondischargeable in bankruptcy.

Background: Rudolf Sienega failed to fileCalifornia state income tax returns for 1990, 1991, 1992, and 1996.The IRS made upward adjustments in Sienega's federal taxliability for those years, and the U.S. Tax Court later ruled thatSienega was liable for additional accuracy-related penalties. AfterSienega's counsel notified the Franchise Tax Board of theadjustments to his income, the Board issued a notice of proposedassessment to Sienega for each of the four tax years. Sienega laterfiled for bankruptcy. The Board filed an adversary complaintseeking to have Sienega's outstanding state tax debtsdeclared nondischargeable on the ground that he had not filed statetax returns in any of the relevant years. The bankruptcy courtgranted summary judgment to the Board, rejecting Sienega'sargument that notifying Board about the income adjustments entitledhim to a discharge.

Result:The Ninth Circuit affirmed. TheCourt explained that Section 523(a)(1)(B) of the Bankruptcy Codebars the discharge of tax debts for which the debtor did not file areturn. A paragraph added in 2005 clarified thatthe term return' means a return that satisfiesthe requirements of applicable nonbankruptcy law, andincludes a return prepared pursuant to section 6020(a) ofthe Internal Revenue Code of 1986, or similar State or locallaw. Section 6020(a) authorizes the IRS to prepare a returnfor someone who has failed to file a return but has disclosedall information necessary for the preparationthereof. Sienega argued that he had complied with asimilar California state law by faxing the Boardnotice of his federal tax adjustments under California Revenue andTaxation Code section 18622, which requires taxpayers to report IRSchanges and corrections. The faxes did not constitute areturn, the Court said, because they did not meetCalifornia law requirements for returns, did not purport to bereturns, were unsigned, did not contain enough data to allowcomplete computation of state tax, and nothing in the faxesindicated an honest and reasonable attempt to satisfy therequirements of tax law. In short, the Courtsaid, one of these things is not like the other. TheBankruptcy Appellate Panel thus correctly concluded that becausethe faxes did not constitute state tax returns, Sienega'sstate tax debts were not dischargeable.

Because of the generality of this update, the informationprovided herein may not be applicable in all situations and shouldnot be acted upon without specific legal advice based on particularsituations.

Morrison & Foerster LLP. All rights reserved

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This Week At The Ninth: Telescopes And Tax Returns - Insolvency/Bankruptcy/Re-structuring - United States - Mondaq News Alerts

December 13, 2021

December 10th saw a submission entered into Intelsats Chapter 11 bankruptcy hearing which used the phrase actio pauliana, which translates as meaning designed to protect creditors from fraudulent legal transactions.

The phrase was used by Luxembourg lawyer, Yann Hilpert, in his declaration to the court. He told the court that under Luxembourg law, an actio pauliana is a legal term brought by creditors to challenge acts done by their debtors in alleged fraud of certain rights. Hilpert is a lawyer acting for a number of creditors known as the Jackson Crossover Group.

The Luxembourg complication is that many of the Intelsat businesses were formally located and financially domiciled in Luxembourg because of its favourable taxation advantages.

Hilperts submission says that he had been asked to investigate and analyse (by the Jackson Crossover Group) whether, in the facts and circumstances here, a Luxembourg court would find Intelsat SAs and Intelsat Investment Holding Sarls (the TopCo Guarantors) release of their guarantees (the TopCo Guarantees) of three series of unsecured notes (the Jackson UnsecuredNotes) issued by Intelsat Jackson Holdings, S.A. (Jackson) to be ineffective if challenged under actio pauliana under Luxembourg law.

The lawyer states that he believes a Luxembourg court would likely find that the facts and circumstances surrounding the TopCo Guarantors releases here satisfy all five elements of an actio pauliana claim.

Excerpt from:

Fraud allegation in Intelsat bankruptcy | - Advanced Television

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December 6, 2021 - Most vendors that trade with debtors know that administrative expense claims are required to be paid in full. In recent large Chapter 11 cases, however, debtors have leveraged the risk of administrative insolvency to escape their obligation to pay trade and ordinary-course administrative claim holders in full as required under sections 503(b), 507(a)(2), and 1129(a)(9) of the Bankruptcy Code. Some debtors have continued paying certain administrative claim holders (typically, professionals) in full, while trade and ordinary-course administrative claimants receive only a small percentage.

In many recent Chapter 11 cases, debtors were able to avoid paying administrative claimants in full.

Verity Administrative claims reduced after plan reserve underestimated the amount of the claims. Recently, in the Verity Health System of California, Inc. bankruptcy in the Central District of California, the debtors secured post-plan confirmation approval from Judge Ernest Robles to pay certain administrative claimants between 15% and 23%. Professionals and administrative claim holders that had already been paid were not subject to this reduction.

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The plan established a $52,749,000 reserve to satisfy non-professional administrative claims that were allowed and unpaid as of the plan's effective date. The reserve amount was based on the debtors' projections of administrative claims that were to be filed. In support of plan confirmation, the debtors submitted a declaration from their financial advisor attesting to the sufficiency of the administrative claim reserve.

The plan was confirmed before the bar date for administrative claims, however, and the debtors greatly underestimated the amount of administrative claims by a factor of eight. In fact, according to the debtors, at one point, they had a mere $5.3 million to satisfy over $25 million in administrative claims. This shortfall led to the liquidating trustee seeking and obtaining court approval over vehement creditor objection to pay administrative claimants between 15% and 23%.

Southern Foods Administrative claim reduced by protocol enabling the accelerated payment of reduced claims.In the Southern Foods bankruptcy before Judge David Jones in the Southern District of Texas, the debtors, seeking to avoid administrative insolvency, obtained approval of administrative claim "protocols" that would enable them to reduce the amount of administrative claims.

Under the protocols, administrative claimants that affirmatively opted in received an "accelerated" cash distribution in exchange for reducing their claim to 80% of the "reconciled" claim amount. These administrative claimants received an initial cash distribution equal to 30% of the reduced administrative claim within 10 business days after opting in, with the remaining amount to be paid at some future date to be determined by the debtors with the consent of the official committee of unsecured creditors. Conversely, claimants that declined to reduce their administrative claim were subordinated to the administrative claimants that opted in.

In this case, the debtors successfully leveraged the risk of administrative insolvency to reduce the amount of administrative claims.

Pier 1 Administrative claims put in peril after court orders delay in payment until plan effective date. Finally, in the Pier 1 bankruptcy in the Eastern District Court of Virginia, Judge Kevin Huennekens approved the debtors' motion to delay payment of all but certain "critical expenses" included on an interim budget.

Numerous landlords, among other creditors, objected to the motion because the rent due under their respective leases would be deferred. As an alternative, the landlords requested the immediate payment of rent. The court granted the landlords an administrative expense claim for the deferred rent but denied their request for immediate payment.

After the debtors remained in possession of their leased premises and delayed paying rent for two months, the debtors became administratively insolvent, resulting in the landlords' administrative claims becoming virtually worthless.

The debtors subsequently filed a plan that called for administrative claimants to receive reduced payment. In order to obtain creditor body approval, the plan provided a release from Chapter 5 causes of action for administrative claim holders that voted in favor of the plan. (Chapter 5 of the bankruptcy code contains the debtor's avoidance powers, including preferences and fraudulent transfers under 11 U.S.C. 547 and 548.) The creditor body voted in favor of the plan, and administrative claimants were paid far less than 100-cent dollars.

While creditors are required to continue providing services to debtors post-petition and the Bankruptcy Code requires administrative claims to be paid in full, Verity, Southern Foods, Pier 1 and other cases, such as Sears (Bankr. S.D.N.Y. 2018) and Toys "R" Us (Bankr. E.D. Va. 2017), show that holders of administrative claims must be vigilant in protecting their claims; otherwise, they may be left with drastically reduced claims.

Below are several tips that can assist creditors in collecting 100% of their administrative claims. Of course, whether these will work depends on the circumstances of the case and the creditor's leverage:

Be proactive. Do not assume that administrative claims will be paid in full. Monitor the debtors' operations and ensure, to the extent possible, that the debtors make payment in advance or on delivery.

Participate on the creditors committee. Committee members will receive timely periodic reporting on cash flows (and administrative solvency).

Attempt to work with the debtors to obtain immediate payment on an informal basis, rather than seeking court intervention. As Pier 1 demonstrates, seeking court intervention may backfire badly for administrative claimants. As in Pier 1, the court may allow debtors to defer the payment of the administrative claim until a plan effective date, creating the risk that the debtors could become administratively insolvent in the interim.

If the administrative claim is based on an executory contract, move to compel the assumption or rejection of the executory contract. The assumption of the executory contract will ensure that post-petition cure amounts are paid. The rejection would cap the amount of the administrative claim that would potentially be at risk.

If the plan calls for administrative claims to be satisfied from a reserve, make sure that the administrative bar claim date occurs before plan confirmation, in order to ensure the sufficiency of the administrative claim reserve. Additionally, seek discovery from the debtors to confirm the sufficiency of the plan's reserves.

Ensure that the plan provides identical treatment for all administrative claims and does not permit certain claims (i.e., professional fees) to be paid ahead of others.

Negotiate a plan provision providing for (i) cash distributions to comply with the absolute priority rule to avoid any distribution to any lower priority creditor prior to the satisfaction of all administrative claims; (ii) any excess amount set aside for professionals to be paid to administrative claimants that remain unpaid; and (iii) the clawback of previously paid administrative claims in the event of a shortfall in the distribution to administrative claimants.

Negotiate release and exculpation provisions to become effective only upon the actual payment in full for administrative claims.

Negotiate for the capping of professional fees that may otherwise deplete the debtors' estates.

Negotiate to trade a reduction in the administrative claim in exchange for a release of Chapter 5 claims.

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.

Schuyler G. Carroll is a partner in Loeb & Loeb's Restructuring and Bankruptcy practice. His practice focuses primarily on Chapter 11, 15 and 7 bankruptcy proceedings; distressed acquisitions; creditors' rights enforcement; and litigation and advisory work. He can be reached at scarroll@loeb.com.

Bethany D. Simmons, a partner with the firm's Restructuring and Bankruptcy practice, focuses her practice on bankruptcy reorganization and commercial litigation, and has experience guiding debtors in health care and oil and gas industries through the stages of Chapter 11. She can be reached at bsimmons@loeb.com.

Noah Weingarten, an associate in Loeb & Loeb's Restructuring and Bankruptcy practice, provides advice on complex bankruptcy and restructuring matters. He maintains a commercial and bankruptcy litigation practice with an emphasis on bankruptcy avoidance litigation and media and entertainment disputes. He can be reached at nweingarten@loeb.com.

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Protecting creditors' administrative claims in Chapter 11 bankruptcy cases - Reuters

* Country is being pushed towards bankruptcy - EranSun, Dec 12, 2021, 11:16 am SL Time, ColomboPage News Desk, Sri Lanka.

Dec 12, Colombo: The country has plunged into a massive financial crisis, with all sectors including the economy collapsing but the budget -2022 has no proposals to resolve any of the burning issues said MP Eran Wickramaratne addressing the final debate of the budget 2022 held in Parliament on Friday.

At a minimum this government should properly identify the fundamental reasons for the crisis, and its failure to recognize the depth of the crisis is pushing the country further into the abyss and plunging it into financial bankruptcy.

Further speaking on the expenditure vote of the finance ministry Mr. Wickramaratne said that as the Opposition understands the extent of the crisis in which the country has fallen, they as a responsible opposition, are not asking " " now. In fact, the first of the serious problems we face is the widening budget deficit. The second is the Balance of Payments deficit leading to a foreign reserve depletion and now pushing the country into near financial bankruptcy.

The objective and the policy of this government is not to develop the country but to deceive the people using various slogans such as national economy, national security and narrow nationalism or racism.

Amidst boasting of these slogans even in 2006, when Mahinda Rajapaksa came into office, government revenue as a percentage of gross domestic product (GDP) was 17.3%. But by 2014 it had dropped to 11.40 %.

But in a very short time during the previous regime the national revenue began to grow again. Accordingly, by the year 2018, the government revenue had increased to 13.5% of the GDP. During this period there was a constitutional coup. Further, despite the unfortunate Easter attack in 2019, we were able to maintain government revenue at 12.6%. But what has happened now?

When we took over the government in 2015, the government revenue was Rs.1000 billion and by 2019 it had almost doubled to 1997 billion rupees. This is what a country needs to improve its economy he said.

Elaborating on the governments accounting gimmicks the SJB MP said that this government estimated the revenue for 2021 at 2029 billion rupees. But now the estimate is revised to be 1561 billion rupees. But by December, it could further drop by Rs 100 billion rupees. Then there is a shortfall of 500 to 600.

Even under this budget government revenue for 2022 is projected to be at 2284 billion rupees, an impossible target. That means 800 billion rupees increase in revenue within a year. This is again a false assessment. I urge the government to tell the truth and face reality. What are the proposals in this budget to increase revenue by 40%? Public officials knowingly should not sign reports where it is abundantly clear that estimates are unrealistic. According to the governments false estimate, the budget deficit will be 8.8% by 2022. But the Verite Research Institute states that it will exceed 11 %.

The balance of payments of deficit over a period of time has led to a foreign reserve crisis. Imports should be reduced, and exports should be increased. No budget proposals have been put forward to address any of these structural issues. So how could economy and the financial stability be improved?

The Rajapaksa regime constitutes family rule in which the economy of the ruling cohorts is strengthened rather than the upliftment of the country and its people. It was during the first term of Mahinda Rajapaksa that excessive and unproductive borrowing led to a debt trap. Who was the Finance Minister at that time? That is the present Prime Minister. Who was the Secretary to Finance? The present Secretary to the President. Who was the then Governor of the Central Bank? It is the present Governor of the Central Bank! It is the same bunch of people running the show, with major portion of the annual budget allocations at their disposal.

When the country was short of foreign currency in 2007, they introduced International Sovereign Bonds (ISB) to the market. Nivard Cabraal was then the Governor of the Central Bank. These were short term bonds at a high commercial rate. The country is still repaying these loans rolled over many times obtained during the period of Rajapaksas. It was gambling without the management of fiscal policies.

Amidst strikes, threats, political conspiracies and Easter attacks, when the government was handed over in 2019, foreign reserves stood at $ 7.2 billion. Today the cash reserves are about $ 1 billion as stated by the state minister of Finance in Parliament. Possibly the lowest foreign currency reserves for any country in the world.

Could there be a more dangerous situation facing the country than this? "This government and its members perhaps may not understand what we are saying or the severity of the situation of the country." he said.

When a country plunges into such a low rating, who gives us credit? In addition to paying off debts, how do we import essential goods? Already, thousands of containers stuffed with essential goods are stuck at the port for want of dollars for banks to pay for letters of credit.

Thousands of small businesses have been left stranded due to the arbitrary import ban. There are about 85,000 registered SME businesses in the country. Of those, 29,000 have been shut down or crippled. The private sector is the only real engine to create employment. The Finance Minister said that the public Service is a burden on the economy. It goes without saying that the public sector of 1.4 million is heavily over staffed, Real jobs must be created in the private sector. The private sector requires a stable fiscal policy regime, Governments have failed in providing that climate. This budget is no different.

If the debt is not paid the country will be a bankrupt economy. Then, the country ratings will be gone. By the beginning of 2022, we are close to this major catastrophe as the budget does not address any of the burning issues facing the country. Therefore, Mr. Eran Wickramaratne requested that Parliament pays attention to the issues before it is too late. (MP Eran Wickramaratnes Media Unit)

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Sri Lanka : Country is being pushed towards bankruptcy - Eran - Colombo Page

Have you been inside a Hertz office lately? I was, last month, at Los Angeles International Airport. It didnt feel like a successful business. It wasnt like stepping into, say, an Apple store, agleam with brushed steel and white walls and pleasant, impeccably groomed salespersons. It wasnt even like stepping into a Starbucks. It was like stepping into a soup kitchen for the homeless: short-staffed, shabby decor, long lines, unhappy customers. A clerk told me to fetch my car from a separate office a couple of miles away (Take an Uber); the industrial-looking building I was sent to didnt have any kind of sign indicating whom I was doing business with. The sole attendant on the premises said it didnt matter that Id booked a reservation. There were no cars. The managers had overbooked, he said, and whenever they do that, they go home and leave me to handle irate customers like you. I felt sorry for him.

Yes, Covid-19 has created supply chain problems for Hertz and other rental car companies, and also a labor shortage that makes it hard for Hertz to staff back up. Still, it was hard to reconcile my customer experience with an enterprise thats so successful its profit margin is 39 percent and so flush that its buying back its own stock. Profits were up not because Hertz was renting more cars; they were up because Hertz was renting fewer cars, pricing them, according to an analyst cited by Warren, 147 percent higher than before the pandemic.

The supply chain snafu drove up the price of cars, but, as Warren further pointed out, Hertzs pricing for what it called the elements in vehicle rental pricing that management has the ability to control was up 44 percent over the previous year. Hertz wasnt enjoying financial success in spite of its seedy rental offices, its loss of half its workforce, its inability to furnish many rental cars, and the outrageously high price it commanded for those few rental cars that were available. It was enjoying financial success because of these things. It was acting very much like a corporation owned by two finance companies.

Whats happening at Hertz is emblematic of whats been happening at American corporations. Some people look at this picture and conclude that corporations increased concentration and rising profits demonstrate theyre becoming more powerful than ever. Thats true. Other people look at corporations indifferent treatment of all personnel except those in the C-suites, their disinclination even to pretend that they provide customer service until someone makes a stink on social media, and their desperation to please shareholders and conclude that corporations have become pitifully weak. Thats also true.

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Elizabeth Warren Wants to Know How Hertz Went From Bankruptcy to Buybacks in Six Months - The New Republic

NEW DELHI :The Insolvency and Bankruptcy Board of India (IBBI) will set up panels of resolution professionals based on location of their registered office and the volume of their ongoing assignments, a databank that tribunals can use to quickly appoint a professional to take over defaulting companies.

IBBI said a new set of guidelines will come into effect from 1 January 2022 on the appointment of insolvency resolution professionals, liquidators and bankruptcy trustees, on the basis of which it will draw up panels of experts to be hired by tribunals.

Bankruptcy tribunals reach out to IBBI under different circumstances to rope in resolution professionals, but the process of identifying, nominating and appointing a resolution professional takes time. The proposed creation of panel of resolution professionals will have a validity of six months after which a new panel will replace it, IBBI said in the new guidelines issued on Wednesday.

For example, the first panel under these guidelines will be valid for appointments during January June 2022, and the next panel will be valid for appointments during July December 2022, and so on," IBBI said in the regulations.

Usually, when a tribunal asks IBBI to nominate a resolution professional, the regulator does not have information about the volume, nature and complexity of an insolvency or bankruptcy process and the resources available at the disposal of an insolvency professional. In such a situation, IBBI is unlikely to add much value by recommending a professional for the process, IBBI said explaining why the proposed panels will be useful for quick decision making by the tribunal.

The current process of appointment may entail two to three weeks, which could be saved if the tribunal has a ready panel of professionals recommended by IBBI and it can pick up any name from it for appointment, IBBI said.

The regulators move is in line with the governments efforts to quicken the process of bankruptcy resolution, a policy priority. Avoiding delays in the resolution process is key to preserving the value of assets available for restructure and for effective turning around of the corporate debtor.

A Parliamentary standing committee on finance led by BJP leader Jayant Sinha had in August flagged the delays in the bankruptcy resolution process saying that more than 71% of the cases were pending for more than 180 days.

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IBBI to make panel of professionals to speed up bankruptcy process - Livemint

The Reserve Bank of India (RBI) on Thursday moved Mumbai bench of National Company Law Tribunal (NCLT) for the insolvency and bankruptcy proceeding of Reliance Capital.

The central bank had superseded the board of the company on Monday, citing defaults and governance issues.

The RBI appointed former executive director of Bank of Maharashtra Y Nageswar Rao as the administrator and gave him an advisory board to discharge his duty.

In a statement on its website, the RBI said there would be an interim moratorium on and from the filing of the application till its admission or rejection by the NCLT.

Under rules, the adjudicating authority will declare a moratorium, prohibiting suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority.

The moratorium will also prohibit transferring, encumbering, alienating or disposing off by Reliance Capital any of its assets or any legal right or beneficial interest, and will prevent any action to foreclose, recover or enforce any security interest created by the company regarding its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.

An owner or lessor of the property also cannot recover the property occupied by Reliance Capital.

However, the supply of essential goods or services to the company will not be terminated or suspended or interrupted during the moratorium period.

The moratorium will also not apply to any transaction notified by the central government in consultation with any financial regulator, and will not affect any surety in a contract of guarantee to a corporate debtor.

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RBI moves NCLT Mumbai for bankruptcy proceedings against Reliance Capital - Business Standard

Dec 4th 2021

LONG BEFORE the invention of stakeholder capitalism, a core principlethat the interests of customers, employees and society should be as high or higher than those of shareholderswas carved into the plaster at Johnson & Johnsons head office in New Brunswick, NJ. Our Credo as J&J calls its mission statement, dates back to 1943, when it was penned by Robert Wood Johnson II, a former boss of the pharmaceutical firm.

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J&J says the Credo has helped construct a corporation built to last. Worth $420bn, it is the worlds biggest drugs firm by value. It is one of only two companies in America with a triple-A credit rating (the other is Microsoft). Of its $82.6bn of sales last year, pharmaceuticals accounted for 55%, medical devices 28% and consumer health 17%. It produces everything from blockbuster cancer drugs to band-aids and baby powder.

Some argue that for all its pieties, J&J has let down both society and shareholders. In recent years it has faced multiple lawsuits against products ranging from prescription opioids to talcum powder to Risperdal, an antipsychotic medicine. It denies all wrongdoing, but the succession of controversies has tarnished its image and loaded it with legal liabilities.

Moreover, since 2012 J&Js total returns to shareholders have lagged behind the S&P pharmaceutical benchmark by about a third. Investors say the legal maelstrom is partly to blame. Another factor is lopsided performance. Buoyancy at J&Js pharmaceuticals business, where sales rose by 8% last year, is overlooked because of low single-digit growth and, at times, declines in the medical devices and consumer-health divisions.

Now J&J is taking stepsradical by its own standardsto reform on both counts. Alex Gorsky, its outgoing chief executive and soon-to-be executive chairman, is trying to draw a line under the legal troubles. He is also overhauling the firms structure. His methods have not yet had the desired effect. But they could restore the firms standing with investors and society.

The first sign of progress has been in the legal realm. In August 2019 an Oklahoma court ruled that J&Js promotional campaigns downplayed the risks of opioids and meant the firm bore a wide responsibility for the deadly epidemic. It was ordered to pay $465m. But on November 9th the states Supreme Court overturned the ruling, saying it was based on a wrong interpretation of public-nuisance law. The previous week, a California court threw out a similar case against J&J and other defendants.

Such wins for J&J coincide with what Carl Tobias of the University of Richmond School of Law, calls a new legal approach. The firm has a history of litigating cases to the bitter end, he says. Lately, he points out, it has shown more willingness to settle. This summer it finalised an opioid settlement of up to $5bn with numerous American states, cities and counties which it hopes will lay the claims against it to rest. In October it said it had set aside $800m to settle most of its Risperdal cases.

The company is still walking a legal tightrope when it comes to claims related to talcum powder. In October it deployed what is known disparagingly as the Texas two step, a manoeuvre in which it set out to ring-fence liabilities on 30,000 or more talc-related litigation claims by creating a Texan subsidiary, LTL Management, that promptly filed for Chapter 11 bankruptcy in North Carolina. It went down poorly. The North Carolina judge shunted the bankruptcy case to New Jersey, where many of the talc claims are filed. Some Congressional Democrats accused the firm of trying to manipulate bankruptcy law to deny claimants their day in court. J&J argues that it has established a $2bn trust attached to LTL to help cover talc-related liabilities under Chapter 11. Investors hope it could mark the beginning of the end of the saga.

Mr Gorskys second sweeping change is structural. J&J said in November that over the course of 18-24 months it would split into two firms, one focused on consumer health, the other combining pharmaceuticals and medical devices. The consumer-health business badly needs a nip and tuck. It is no longer enough to boast that nine out of ten dermatologists recommend a skin product. Shoppers require Kim Kardashian-style razzmatazz. J&J hopes the consumer-health business will fare better with more focus. The break-up will also crystallise value lost in the conglomerate structure. It is a path trodden by GSK, a British drugs firm, which is spinning off its consumer-health joint venture with Pfizer. But a lot remains unknown about the split. Investors greeted it with a shrug.

What shareholders are excited about is the pharma business. They take seriously J&Js pledge to ramp up annual drugs sales from $45.6bn last year to $50bn by 2023 and $60bn by 2025. It reckons it can outstrip average growth in the drugs market even though one of its best selling medicines will lose patent protection. It promises new treatments, such as cell and gene therapies. Its oncology pipeline is strong. It will not be all smooth sailing, however. The pharma firm will still be tied to the sluggish medical-devices business. And if the talc-related bankruptcy man oeuvre fails, liabilities could fall onto the pharma business.

These are exciting times in life sciences. Pfizer is adding a fortune to sales thanks to its covid-19 breakthroughs. Eli Lilly is attracting investors because of an experimental Alzheimers drug. Against such competition, J&J urgently needs to move beyond the legal controversies weighing upon it and its share price.

The biggest question is whether the company can become more dynamic overall. Partly owing to its mission statement, J&J carries a lot of history on its back. It makes decisions cautiously. Mr Gorsky has taken years to recommend a break-up, though investors have wanted one since he took over in 2012. Listening properly to shareholders would have meant earlier, possibly preventive, ingestion of the correct medicine.

Read more from Schumpeter, our columnist on global business:Decoupling is the last thing on business leaders minds (Nov 27th 2021)Walmart gets its bite back (Nov 20th 2021)The supermajors have an LNG problem (Nov 6th 2021)

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This article appeared in the Business section of the print edition under the headline "No more tears"

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Can Johnson & Johnson put the taint of scandal behind it? - The Economist