Skip to content

East Africa: Restructuring Quarterly Bulletin December 2022

4 January 2023
– 30 Minute Read



Kenya conducted its general elections peacefully in August 2022, and the new government will be in office for the next five years. In his inauguration speech, President William Ruto emphasized that his administration’s key task will be to rejuvenate the economy and bring down the cost of living – the 12-month inflation rate in Kenya is currently at 9.59%.

The Ministry of National Treasury and Planning forecasts that Kenya will grow at a rate of between 5.8% and 6.2% for the 2022/2023 financial year.

Corporate Updates


  • More solvent group restructurings have been conducted this year.
  • Bad loans held by Kenyan banks have decreased by the largest monthly margin in 15 years.
  • More companies are financially distressed, but relatively few are using insolvency processes.
  • The Capital Markets Authority (CMA) has concluded a memorandum with the Kenya Development Corporation (KDC, allowing KDC to offer advisory services to listed companies that may be struggling financially.  

Group solvent restructurings

In the last year, we have seen several solvent restructurings being implemented by group companies in Kenya. The main underlying reasons for such restructurings have been to create tax efficiencies, manage risk profiles for the relevant group, or increase efficiency and improve transparency within the group structure.

Financially distressed entities

The Central Bank of Kenya (CBK) reported that the non-performing loans shrank between August 2022 and September 2022 to KES 491.8 billion, representing a decrease of KES 13.2 billion. This is the most significant monthly drop in defaulted loans since June 2007, when it fell by 28.3 billion compared. Between June 2022 and September 2022, the decline in bad loans was KES 22.6 billion. The drop is significant as the bad loans had risen to over half a trillion in June 2022. 

While several companies appear to be financially distressed, the statistics from the official receiver show that only a few companies and creditors are utilising the insolvency processes under the Kenyan Insolvency Act. As of September 2022, only 11 petitions had been made to the courts to liquidate companies, and seven voluntary liquidations were carried out. In addition, only nine companies had been put under administration and only one under administrative receivership.

The CMA has concluded a memorandum with the KDC, allowing KDC to offer advisory services to listed companies that may be struggling financially. The CMA has set up a recovery board where listed entities facing financial difficulties may be placed until recovery. However, the regulator has not yet placed any listed companies on the recovery board.

Several companies in financial distress have appeared in the press lately, including Kenya Airways and Airtel Kenya, among others:

  • Kenya Airways – The new administration has been exploring various options to revive state corporations. The government is considering splitting the company into multiple subsidiaries, which will explore distinct lines of business such as drone service and charter services. The company has been given 14 days to conclude talks with its pilots, who recently ended a four-day strike. 
  • Kaluworks Limited (Kaluworks) – Kaluworks, a manufacturing firm placed under NCBA Bank, has come out of administration and carried out a voluntary arrangement with its creditors. Kaluworks owed its secured lenders a collective KES 9.1 billion, while unsecured lenders were owed KES 3.5 billion. The shareholders of Kaluworks injected KES 1.2 billion into the business, which was used to partially pay the debts of secured lenders. The remaining secured debt was written off. A compromise was reached concerning unsecured debts, allowing for part of the debts to be written off and the remainder to be settled in installments. 
  • Airtel Kenya (Airtel) – Airtel, facing financial difficulty, has split its telecommunication business from its mobile money services after selling a minority stake (25.77%) in Airtel Money Kenya Limited, the entity that will manage mobile money services. Airtel has undertaken similar ownership changes in Rwanda, Tanzania and Zambia. The Central Bank of Kenya will regulate Airtel Money Kenya Limited as a stand-alone business. 
  • Chase Bank Kenya Limited (in liquidation) (CBKL) – The CMA has taken enforcement action against certain former board members, senior management, and the reporting accountant of CBKL for their role in providing false and misleading information during the issuance of the bank’s 2015 medium-term note. A link to the CMA press release can be found here

Regulatory developments


  • Digital credit providers (DCPs) in financial distress can undergo voluntary liquidation, subject to regulatory approval and certain conditions.
  • The CBK may suspend or revoke the licence of a DCP being wound up or liquidated.
  • It seems likely that distressed DCPs may be allowed to use administration and other restructuring processes under the Insolvency Act 2015.

Digital Credit Providers Regulations provide for insolvency processes for digital credit providers

The Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 (the Regulations) were published on 18 March 2022, requiring DCPs operating in Kenya to register by 17 September 2022. 

DCPs falling under the Regulations are entities that provide credit to persons through a digital channel and are not regulated under any other written law. 

The CBK received 288 applications for licences by the deadline of 17 September 2022. The DCPs that did not apply for a licence within the deadline or those whose licence applications were rejected by the CBK are required to stop conducting digital credit business and, if operational, wind up their operations.

  • Liquidation processes for DCPs 

Under Regulation 57, a DCP can voluntarily liquidate itself with the approval of the CBK provided that it can meet all its liabilities.  

There is presently no prescribed form for application to the CBK for voluntary liquidation of a DCP. When an application is approved, the DCP must cease all operations except for incidental activities to preserve, conserve, or realize its assets and settlement of obligations. The CBK is required to follow up to ensure the smooth execution of the liquidation process. 

The Regulations do not specify whether the voluntary liquidation processes under the Insolvency Act 2015 apply to the DCP. Still, we expect that to be the case in the absence of any statutory provision or regulation to the contrary. The Regulations also do not reference other insolvency processes under the Insolvency Act 2015, such as administration and company voluntary arrangements. We expect that a financially distressed DCP would be able to use these processes subject to the approval of the CBK.  

The CBK has the authority to suspend or revoke the licence of a DCP if an order is issued for its winding up or the DCP goes into liquidation.

  • Impact on licensing of a DCP in liquidation or winding up.

CBK approval is also required before a DCP enters into an amalgamation or an arrangement to transfer all or any part of its assets to another entity where the transaction or asset disposal is not done in the ordinary course of the DCP’s business. 

Further, a DCP must notify the CBK 30 days before entering into any agreement or arrangement with a third party to invest in the DCP or finance the activities of the DCP.

Interesting developments in case law

In the matter of Zarara Oil & Gas Company Limited (Miscellaneous Application E532 of 2021) [2021] KEHC 191 (KLR) (Commercial and Tax) (3 November 2021) (Ruling)

In a series of rulings, the Kenyan High Court has determined the nature of recognition of foreign insolvency proceedings in Kenya and held that foreign liquidators might practice in Kenya upon recognition. The Court held that for a court to recognize foreign insolvency proceedings, there should be proof of the applicant’s appointment as a foreign representative and the existence of the foreign insolvency proceedings. In the second ruling, the High Court noted that a foreign liquidator may still entrust the distribution of all or part of the debtor company’s assets in Kenya to a person designated by the court, provided the court is satisfied that such designation is in the interest of and for the protection of creditors in Kenya. To read more, click here.

East African Cables Limited v Trans-Africa Energy Limited (Insolvency Petition E050 of 2021) [2022] KEHC 12260 (KLR) (Commercial and Tax) (29 July 2022) (Judgment)


  • The court ruled that a defective statutory demand cannot be used to mount a petition for the liquidation of a company. 
  • In this case, the demand was defective because it was issued by a court official and not a creditor of the company.

East Africa Cables Limited (Cables) and Trans-Africa Energy Limited (Trans-Africa) entered into a Deed of Settlement of Debt in which Trans-Africa acknowledged that it owed Cables KES 25, 984,422. 

Cables filed a petition seeking to have a liquidator appointed over Trans-Africa, arguing that Trans-Africa could not pay its debt. Trans-Africa opposed the petition, arguing that the statutory demand was defective and did not meet the definition of a company unable to pay its debts.

Trans-Africa stated that the statutory demand was defective because it had been signed by the Deputy Registrar of the High Court rather than Cables or an authorized representative. Trans-Africa also stated that other businesses owed it various sums and that these would be more than enough to cover the debt owed to Cables. 

In making its decision, the court relied on section 384 of the Insolvency Act, which requires a creditor to whom a company owes KES 100,000 or more to serve a statutory notice on the company. 

The court examined case law such as Blueline Properties Limited v Mayfair Insurance Company Ltd [2019] eKLR, where it was held that a creditor must issue a statutory demand. The definition of a creditor in section 2 of the Insolvency Act does not include an agent such as an advocate. 

In Global Truck Limited v Borderless Tracking Limited [2020] eKLR, a statutory demand that a deputy registrar had issued was found to have been issued contrary to the statute. 

In this case, the court held that a defective statutory demand could not be used to mount a petition for the liquidation of a company and dismissed the petition. From the case, it is crucial that a creditor sends the statutory demand themselves and not through a third party such as its legal counsel or an agent.  

Ruling the matter of Kenyon Ltd (under liquidation) (Insolvency Case No 19 of 2020) (Commercial and Tax) (14 October 2022) (Ruling).


  • This case highlighted the importance of following the timelines for holding general and creditors’ meetings during liquidation proceedings.
  • The liquidator was found to have breached some of his fiduciary and professional duties.
  • Although the court did not, in this case, remove the liquidator, it found that breach of duty is grounds for removal. 

Kenyon Limited (Kenyon) was placed under members’ voluntary liquidation on 13 March 2021. The liquidator made an application seeking the court’s sanction to sell the company’s assets to recover rent arrears of KES 19,858,629.80 owed to Katko Investments Limited (the landlord).

However, the landlord opposed this application, arguing that the liquidator should be removed by the court because the liquidator:

  • Had no authority to act as the 12 months allowed for liquidation had elapsed, and the liquidator had not convened a general company meeting within three months after the expiry of the 12-month liquidation period as required under the Insolvency Act.
  • Did not convene a creditor’s meeting upon forming the opinion that the company was unable to pay its debts; and 
  • Did not need court sanction to sell the company’s assets and doing so was an attempt to regularize his ultra vires actions. 

In its ruling, the court made the following key findings:

  • Under Section 401(1) of the Insolvency Act, a liquidator must convene a general meeting within three months of the end of the first 12-month period of liquidation and at the end of any subsequent 12-month periods that may follow. The duty is based on the fiduciary relationship between the company and its liquidator.
  • Under the Insolvency Act, the liquidator should have convened a creditor’s meeting within 30 days of forming the opinion that the company cannot pay its debts in full within 12 months. When liquidation commenced, the company had rent arrears of KES 4.6 million, but its arrears skyrocketed to KES 19.96 million within six months. This was not an indication of a company being able to clear its debts in the remaining six months of the year. The court held that the liquidator breached his duty to convene a creditor’s meeting, and criminal proceedings may be instituted against him. However, he was still rightfully in office as per the Insolvency Act. The court held that it has no jurisdiction to impose a fine for the liquidator’s breach of duties.
  • Under members’ voluntary liquidation, a liquidator is given powers under Section 462 of the Insolvency Act to sell the company’s assets to realise any outstanding debts and does not need court sanction to do so. The members must give authorisation through a special resolution which can be the same special resolution appointing the liquidator. However, in a creditor’s voluntary liquidation, the liquidator must seek approval of the liquidation committee formed by the company and its creditors or the court to sell company assets.
  • Sections 465 (5) and (6) allow the court to exercise its discretion to remove a liquidator on application by any person dissatisfied with that liquidator’s actions and decisions. A liquidator’s actions should always be beyond reproach, maintain professional standards and be in the best interests of the stakeholders. The court did not remove the liquidator from office to avoid prolonging an already lengthy liquidation process; however, the court affirmed that a breach of a liquidator’s fiduciary and professional duties is grounds for removal. 


The economic climate in Uganda has continued to be harsh, with some experts predicting even more challenging times ahead. The economy is reported to have shrunk in the second quarter as millions struggled with dwindling incomes and rising inflation.  

On 6 October 2022, the Monetary Policy Committee of the Central Bank increased the Central Bank Rate (CBR) by one percentage point to 10%, which is the highest the rate has been since 2012. The increase in the CBR has, in turn, resulted in higher commercial bank lending rates of between 19% and 21%. 

In response to the tough economic times, the Government has made some interventions in the 2022/ 23 budget, such as lowering the cost of borrowing, for example, by reducing stamp duty.

Corporate Updates


  • South African retail store Game is exiting the Ugandan market, among other underperforming African markets.

On 4 October 2022, South African retail store Game announced that it had started the process of exiting the Ugandan market, joining its peer Shoprite Holdings SHPJ.J, which pulled out of the Ugandan last year market. 

Massmart, the owner of Game stores in Uganda, is Africa’s third-largest distributor of consumer goods and one of the biggest retailers of general merchandise, liquor, home improvement equipment and supplies, as well as a wholesaler of basic foods.  

It appears that Game, which opened in 2004 with an investment of USD 11 million, failed to thrive in the market and has suffered the fate of other retailers such as Shoprite (South African) and Kenyan-owned stores Tuskys, Uchumi and Nakumatt, which all exited the market between 2017 and 2019. Game has also decided to leave 14 other underperforming jurisdictions outside South Africa, including Botswana, Ghana, Kenya, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Tanzania and Zambia. 

Regulatory Updates


  • The Government has removed stamp duty on certain transactions, with the aim of reducing the cost of borrowing.

The Stamp Duty (Amendment) Act 2022 has been passed to amend certain provisions of the Stamp Duty Act 2016. These measures (see below) are expected to reduce the cost of borrowing. They are in addition to earlier amendments made to the Act, including the change of stamp duty on debentures and further charges from 1% of the secured amount to nominal duty. 

The changes are as follows:

  • Stamp duty payable on an agreement relating to the deposit of title deeds, and pawn pledges, has been removed. Previously it was 1% of the total value of the deeds and pawn pledges.
  • Stamp duty payable on a security bond has also been removed. Previously it was 1% of the bond.
  • The stamp duty on agricultural insurance policies has been changed from the previous UGX 35 000 to nil.  


The COVID-19 pandemic resulted in an economic downturn, though Tanzania avoided a more severe pandemic-induced recession than some economies. Economic activity in Tanzania is recovering, with the 2022 real GDP growth rate projected to reach 4% to 5% (4.3% in 2021, up from 2% in 2020). 

The hospitality, mining, ICT, tourism, transport and electricity sectors are driving the recovery. Leading indicators have continued to improve, such as cement production, electricity generation, private-sector credit, goods and services exports, nonfuel goods imports, telecommunications and tourist arrivals. Even so, activity in most sectors remains below pre-pandemic levels. 

Despite the recovery of the economy from the COVID-19 pandemic, the Russia-Ukraine war has complicated the conduct of monetary policy, especially through commodity price shock. Surging food and fuel prices are slowing growth and worsening the cost of living. Inflation has increased but remains manageable at 4.5%. Water and electricity shortages have brought about additional challenges.  

In the last six months, we have identified the following trends in relation to restructuring, insolvency and dispute resolution in Tanzania:

  • The number of corporate insolvencies in Tanzania has fallen due to the economy’s recovery and the Government opening up to foreign investment.
  • Lenders have raised the amount they lend to productive sectors as they seek to play an increasingly important role in post-COVID-19 economic growth.
  • There is a high appetite to purchase distressed assets in hotels, leisure and hospitality. 
  • M&A is still the preferred exit route from financial distress in Tanzania. According to the Fair Competition Commission, from June 2022 to October 2022, there was an increase in M&A activity, with eight M&A deals listed. We expect to see more M&A transactions in sectors such as mining, oil and gas and shipping. 
  • Companies prefer corporate debt restructuring by converting that debt into equity for lenders and investors.
  • Now that the economy is in recovery mode, creditors and lenders are looking more into restructuring loans to afford more flexibility to borrowers. 


The Mauritian economy, like the global economy, has not been spared from high inflation, and several key sectors have been adversely impacted. 

The Monetary Policy Committee (the MPC) of the Bank of Mauritius, at its latest meeting in September 2022, considered the risk factors of inflation in light of developments taking place globally. With economic recovery being back on track, the MPC decided to proceed with the normalization of monetary policy to avoid a de-anchoring of inflationary expectations.  

In this context, the MPC unanimously decided to raise the key repo rate by 75 basis points to 3% per year. 

Corporate Updates

BCE: the fall of a construction giant

Key sectors are facing mounting and, in some cases, insurmountable difficulties in continuing operations. A notable example is Building & Civil Engineering Co Ltd (BCE), one of the largest construction companies in Mauritius, employing approximately 400 workers. BCE, which has been an integral part of the construction sector in Mauritius for over 70 years, was placed into liquidation on 15 July 2022.

Regulatory Updates

The Finance (Miscellaneous Provisions) Act 2022 (the Finance Act), which was enacted following the last Budget exercise of June 2022, has brought about several changes.

From a restructuring and insolvency perspective, some of the changes are linked to readjustments being made to cater to the return to normalcy. Others have been made to plug regulatory loopholes and, most importantly, to prepare for the post-COVID era.

Noteworthy changes

Duties of Directors on Insolvency – Companies Act 2001

During the COVID-19 period, directors were exempted from the obligation to call a meeting of the Board forthwith to consider whether it should appoint a liquidator or an administrator upon taking cognizance of the company’s inability to pay its debts as they fall due. This obligation has been reinstated. It is a further indication if any is needed, that Mauritius is reverting to the pre-pandemic position, particularly regarding the obligations of corporate officers.

Non-Citizens (Property Restriction) Act 1975

The real estate market in Mauritius has witnessed a constant increase in foreign investment over the last decades, which as a general rule would be subject to the approval of the Prime Minister. The government has started exerting even tighter controls over ownership of properties and, more particularly, their disposal by non-citizens. The law now provides that an entity owning property in Mauritius and in which a non-citizen directly or indirectly owns or controls all interests in the property must not be wound up without the express authorisation of the Prime Minister, in his capacity as Minister of Internal Affairs. 

Changes to the Workers’ Rights Act 2019

The latest changes to the Workers’ Rights Act 2019 deal with situations where the Redundancy Board (the Board) finds that the reasons provided by the employer in the notification to reduce its workforce are unjustified. The Board is now empowered to order the employer not to reduce its workforce or close down the enterprise. Should the enterprise breach the order, the affected employee may request the Board for an order directing the employer to reinstate the employee in their former employment or pay a severance allowance. 

Additionally, in instances where an employer terminates a worker’s employment for any reason (other than a reduction of the workforce or closure of enterprises), the worker may, instead of claiming a severance allowance, register a complaint with the supervising officer to claim reinstatement. If the supervising officer is of the opinion that the worker has a bona fide case for reinstatement, the officer may refer the matter to the Employment Relations Tribunal.  

Global Updates



  • Bankruptcy declarations have increased in the European Union but are still lower than in pre-COVID times.
  • Insolvency rules in Germany have been relaxed.

The EU’s regulations on preventive restructuring have come into effect.

Germany loosens insolvency rules again

During the COVID-19 pandemic, the German government loosened insolvency rules by exempting companies in cases of over-indebtedness and financial insolvency. The rules were subsequently reinstated but as rising energy prices hit companies; Germany’s cabinet has approved plans to loosen insolvency rules. Companies will be exempt from the requirement to file for insolvency for over-indebtedness if they can prove that their businesses can be financed for the next four months. The usual requirement is the ability to finance the business for 12 months. 

Increase in bankruptcy declarations

In the second quarter of 2022, declarations of bankruptcies increased by 2.2% in the EU compared to the first quarter of 2022. The levels are still lower than during the pre-COVID-19 pandemic period of 2015 to 2019. A comparison of the second and third quarters of 2022 shows business bankruptcy declarations increased by 66% in Spain and 2.2% in the Netherlands in the third quarter. Over the same period, Italy recorded an 8% decrease in business bankruptcy declarations. 

Early warning tools for EU companies

The European Union (Preventive Restructuring) Regulations were introduced, giving effect to EU Directive 2019/1023. The regulations amend the laws of member states by removing barriers to the effective preventive restructuring of viable debtors in financial difficulties across the EU. 

The regulations introduce the concept of early warning tools through which countries are required to give companies access to tools to detect circumstances that could give rise to a likelihood of insolvency and require immediate attention. Examples of tools that EU countries can offer to companies include how to receive alerts when a debtor has not made certain payments, as well as advisory services or incentives for third parties to flag adverse developments in a debtor. 

  • In the case of debtors, EU countries are also required to ensure:
    • Debtors have access to preventive restructuring frameworks to enable them to restructure to prevent insolvency.
    • Preventive restructuring procedures enable debtors to remain fully or partially in control of their assets and day-to-day business operations.
    • A stay of individual enforcement actions (both secured and preferential claims) to support negotiations of a preventive restructuring plan.
    • Debtors have access to judicial or administrative authority confirmation of restructuring plans that affect claims of dissenting affected parties, provide for new financing, or involve a loss of over 25% of the workforce; and
    • Debtors can access at least one procedure leading to a full discharge of debts within three years of a judicial or administrative authority’s confirmation of the repayment plan.

United Kingdom

Corporate updates

  • The Office of National Statistics has reported that total company insolvencies in England and Wales in the second quarter of 2022 were at 5, 629. This was lower than the 6, 943 company insolvencies recorded during the peak fourth quarter of the 2008 global financial crisis. However, the third quarter data for 2022 shows 40% more insolvencies than in the same quarter last year. 
  • The insolvency rates were driven by creditors’ voluntary liquidations (CVLs), which accounted for 89% of all company insolvencies during the second quarter of 2022. CVLs are the most common company insolvency in England and Wales and are typically used by small businesses going insolvent. The number of administrations was below the levels before the pre-pandemic levels. The third quarter of 2022 had 42% fewer administrations than the third quarter of 2019.
  • One in 10 UK businesses reported a moderate to severe risk of insolvency in August 2022, with 22% noting that rising energy prices were the main concern. Construction, manufacturing, accommodation, food service activities, and wholesale and retail trade industries, accounted for more than half of total business insolvencies in the first half of 2022.

Case law update


  • The courts have ruled on several key company insolvency cases in England and Wales.
  • These provide guidance on matters such as directors’ duty to consider the interest of creditors and certain investors’ rights to claim priority in insolvency cases, among others.

BTI 2014 LLC v Sequana SA and others (UKSC 2019/0046)

In the previous bulletin (available here), we noted that the Supreme Court was to determine when the duty of directors to consider the interest of creditors arises.

The Supreme Court dismissed the appeal and confirmed that the duty of directors to creditors arises when the directors know or ought to know the company is insolvent or bordering on insolvency or insolvency is probable. 

According to the court, the duty of a director is to consider and weigh the creditor’s interest in a manner appropriate to the circumstances of the company at the time, which must be balanced against the interests of other creditors, such as members. However, once insolvency is inevitable, the interests of creditors are paramount.

Re Pinnacle Student Developments (Leeds) Ltd; Bevan and another (as joint liquidators of Pinnacle Student Developments (Leeds) Ltd) v Valeo USL Ltd and another [2022]

A student accommodation developer entered into liquidation part-way through the development, resulting in the construction not being completed until after the developer entered into liquidation. The investor in the development company sought to claim priority over the liquidators of the development company to the rent received from the students once the construction was completed.

The High Court dismissed the investors’ arguments and held that the investors did not enjoy an equitable right to receive rental income because:

  • the company was in liquidation, and a further damages award would be an unsecured debt in liquidation rather than an order of specific performance to receive the rent; and    
  • according to the contracts, the investors had a right to vacant possession but no right to receive rent.

Re Haya Holco 2 Plc [2022] EWHC 1079 (Ch)

The High Court has provided guidance on the factors it will consider when deciding whether to approve an application to summon a meeting of creditors to approve a scheme of arrangement. 

A scheme of arrangement is a statutory mechanism under Part 26 of the Companies Act (2006 Act) that enables a company to make a compromise or arrangement with its members, creditors, or any class of them. 

To affect a scheme of the arrangement, the court must first grant permission to summon a meeting of the creditors, or a class of the creditors. A class must be confined to persons whose rights are similar to make it possible for them to consult with a view to their common interest. 

Haya Holdco 2 plc (Haya), a company in financial difficulty, applied for an order permitting it to convene a meeting of certain of its creditors to consider and approve a scheme of arrangement. Under the scheme, Haya sought to refinance certain senior secured notes to strengthen its financial position and avoid entering into insolvency proceedings in England. Considering the scheme’s proposals, the court found that it involved the necessary element of “give and take”, in particular, because the existing notes would be redeemed in part, and the balance would be released.

One question put to the court was whether the scheme creditors should vote in a single class. The court held that the legal rights of the creditors, not their separate or other interests, determine whether they form single or separate classes. Here, there was more to unite than divide the relevant creditors to give rise to a scheme class. 

The court also considered the following seven matters that could be said to give rise to a potential class issue but concluded that none of them fractured the class of creditors in this application:

  • Different interest rates applicable to the notes
  • Certain differences between the existing contractual rights of the scheme creditors
  • The requirement to make customary confirmations under US securities law
  • The payment of a consent fee to certain scheme creditors
  • The payment of advisers’ fees to advisers of certain scheme creditors that had assisted in devising the proposed scheme
  • The payment of work fees to certain scheme creditors to compensate them for work done to devise the proposed scheme
  • The nomination rights of certain scheme creditors that assisted with devising the proposed scheme; and
  • The access to information for each of the scheme creditors.

United States (US)


  • Corporate bankruptcies in the US are at a 12-year low.
  • A US bankruptcy court has ruled on a foreign court-sanctioned restructuring.

The US has recorded the lowest number of corporate bankruptcies since 2010 in this year. At the end of September, the total number of bankruptcies reported for 2022 was 279. In June 2022, the number of bankruptcies was 39, with 37 filings made in August. 

The industrial sector had the most corporate bankruptcy filings at 48 by the end of September. Consumer discretionary business had 43 filings, while the healthcare sector has had 28 filings this year. The information technology industry had 13 filings in 2022 but accounted for three out of the four largest bankruptcies. OSG Group Holdings, Aearo Technologies, and Celsius Network (a cryptocurrency lender) each had more than USD 1 billion in liabilities at the time of their filings. Aearo and Celsius filed for bankruptcy in July, and OSG in August.

In re Modern Land (China) Co., Ltd 2022 WL 2794014 (Bankr. S.D.N.Y. 18 July 2022), a US bankruptcy court recognised and enforced a foreign court-sanctioned restructuring under Chapter 15 of the Bankruptcy Code. Chapter 15 limits a US bankruptcy court’s authority to enjoin conduct outside the territorial jurisdiction of the US. In this case, the US court’s recognition that a foreign scheme discharges US law-governed debt is controlling, binding and effective,


Japan’s corporate bankruptcies rose to 3,141 in the April to September period, which represented a 6.9% increase compared to the same period last year. The rise in corporate bankruptcies can be attributed to the difficulty in repaying financial aid received amid the COVID-19 pandemic. 

The total liabilities of bankrupt companies rose to USD 11.7 billion during the period after companies such as Marelli Holding, a major auto parts maker, filed for protection under Japan’s civil rehabilitation law. September alone had 599 bankruptcies, an 18% increase from a year earlier.
In terms of industries, the transport sector had 162 bankruptcies, a 42.1% rise attributed to rising fuel prices. The real estate sector had 104 cases, which was a reduction of 5.4%. 


The number of business insolvencies in 2022 is estimated at 12 000. The insolvency rate is attributed to an imploding property market where housing sales have fallen about 45% compared to the previous year. 

The property crisis is threatening other industries, such as the steel industry. The Times estimates that one-third of China’s steel mills could go into bankruptcy. This year, the Banking and Insurance Regulator approved the entry of two local banks into bankruptcy. 

Cryptocurrency Company Insolvencies In The Usa, Germany And Asia

There have been several bankruptcy filings by cryptocurrency companies in the United States this year. It is notable that these companies primarily elected to file for Chapter 11 bankruptcy, which allows companies to reduce financial obligations and merge with a stable business legally. This differs from Chapter 7 bankruptcies, which seek to sell all assets and collect money to repay creditors fully and cease being a going concern.

The following companies have opted to file for Chapter 11 bankruptcy:

  • Celsius Network (Celsius) – Cryptocurrency lender Celsius filed for bankruptcy in New York in June after freezing withdrawals due to extreme market conditions. According to the bankruptcy court filing, Celsius estimates its assets and liabilities to be between USD 1 billion and USD 10 billion, with over 100 000 creditors. The company has USD 167 million in cash on hand.
  • Voyager Digital Holdings Inc (Voyager) – The company, which filed for bankruptcy in July, has indicated that there is a proposed purchase of its assets by FTX US. In the agreement, FTX US is to pay USD 1.422 billion to acquire the value of all of Voyager’s cryptocurrency, estimated at USD 1.311 billion as of 26 September 2022. In the court filing seeking approval of the agreement, Voyager indicates that FTX US’s offer is the highest and best offer received. The offer seeks to allow debtors to recover 72% of amounts owed to them and distribute cryptocurrency in kind of 75% of the total value held by account holders at Voyager (with more if FTX US providers more coin options on the platform).
  • Three Arrows Capital (3AC) – 3AC reportedly owes USD 3.5 billion to 27 companies, including Voyager. USD 2.36 billion is a loan from the Digital Currency Group and constitutes the highest amount owed to a single creditor. The filing was done after Voyager’s filing, which indicated a debt of USD 646 million owed by 3AC to Voyager. 3AC was ordered by a court in the British Virgin Islands to liquidate due to an inability to pay off debt. The US filing by 3AC was a chapter 15 bankruptcy used when a debtor’s assets, claimants and other interested parties are in more than one country.
  • Compute North – Compute North, a bitcoin mining hosting provider, filed for Chapter 11 bankruptcy in the US in September. The company provides hosting services for USD 700 million worth of equipment to 84 mining entities. The company made an additional filing to liquidate assets to cover USD 140 million worth of debt accumulated. 
  • Nuri – Nuri, a cryptocurrency digital banking platform in Germany, filed for insolvency two months after announcing layoffs. The company noted that customers will have full access to their current accounts and crypto wallets and vaults and can continue to withdraw funds. The company’s app, products and services are to continue operating. Solarisbank AG and the digital assets branch protect the deposits.
  • Zipmex Asia Pte (Zipmex) – Zipmex, a cryptocurrency exchange with operations in Thailand, Singapore, Indonesia and Australia, has been under restructuring since August after it was granted protection from creditors in Singapore. Zipmex froze customer wallets in April, suspending withdrawals. V Ventures is offering to acquire 90% of Zipmex for USD 100 million, with USD 30 million payable in cash and the remainder in crypto tokens. This would represent one of Asia’s first rescues in the crypto sector.
  • FTX – FTX, the world’s second-largest cryptocurrency exchange, filed for Chapter 11 bankruptcy protection. The first filing by FTX indicated that it may have over 100 000 creditors. In an updated filing on 14 November 2022, FTX stated that it could have over 1 000 000 creditors. The company has appointed five new independent directors for its five main parent companies and continues to engage with regulators in the US and overseas. 
  • BlockFi – BlockFi, a crypto firm, filed for Chapter 11 bankruptcy protection in the US. In the filing, the company indicated that it had more than 100 000 creditors with liabilities and assets from USD 1 billion to USD 10 billion. The largest disclosed BlockFi client holds USD 28 million. In the court filing, the company owes FTX US USD 275 million.