Recent Developments

France—The rules applicable to French branches of banks based outside the European Economic Area ("EEA") were revised by Order no. 2015-558 dated 21 May 2015 (the "Order"). Principally, the Order clarifies preexisting rules but also introduces additional requirements in accordance with Article 47(1) of Directive 2013/36/EU of 26 June 2013 (CRD IV), whereby Member States are prohibited from applying more favorable standards to branches of non-EEA banks than the standards applied to banks that have a head office located in the EEA. The new rules relate to bank capital requirements, governance and compensation. They apply both prospectively and retroactively. Existing bank branches have until November 2016 to comply. A more detailed discussion of the new rules is available here.

On 6 August 2015, France adopted legislation designed to promote economic growth, activity and equal opportunity named after the French Minister of Economy, Mr. Emmanuel Macron (the "Macron Law"). The Macron Law has implications for various areas of the French economy. Among other things, the new legislation completes reforms to French insolvency law first undertaken in 2014. With the implementation of these reforms, which include the creation of specialised insolvency courts for large insolvency cases and the introduction of rules that permit "cramdown" of shareholder interests in reorganisation proceedings, the new French regime creates a level playing field on which creditors will play an increasingly greater role. A more detailed discussion of the insolvency law reforms in the Macron Law can be found here.

Italy—Concluding a process started during the summer of 2014, the Italian legislature recently finalised a set of measures governing direct lending into Italy by nonbanking institutions. Qualified lenders may now lend into Italy based on the new measures introduced by Law Decree No. 91 of 24 June 2014 (the "Law Decree"), as converted into law by the Italian Parliament on 7 August 2014. Under the Law Decree, Italian insurance companies, Italian and EU alternative investment funds and Italian securitisation vehicles may now lend into Italy. Italian (closed ended) alternative investment funds falling within the scope of the European Directive 2011/61/EU on alternative investment fund managers ("AIFMD").  may now carry out direct lending to Italian borrowers other than consumers and microenterprises without any limit on the financing's scope. Non-Italian EU alternative investment funds falling within the scope of AIFMD may carry out direct lending to Italian borrowers other than consumers and microenterprises on a "freedom to provide services" basis or through the establishment of an Italian branch, provided that they are permitted to extend direct financing under the laws and regulations of their home country as well as Italy. A more detailed discussion of the measures introduced pursuant to the Law Decree and the AIFMD is available here.

On 5 August 2015, the Italian Law Decree No. 83 of 27 June 2015 (the "Decree") became law as part of the reform process for pre-insolvency proceedings under Italian Bankruptcy Law (Royal Decree No. 267 of 16 March 1942). The purpose of the reform is to provide distressed Italian entities with a more modern and flexible insolvency law system based on private rather than judicial initiative. The Decree introduces measures designed to, among other things: (i) give distressed Italian entities greater access to rescue financing; (ii) promote the active participation of creditors in pre-insolvency proceedings (e.g., by giving creditors the ability to propose alternative restructuring plans under certain circumstances); (iii) empower Italian courts to approve asset sales as part of a restructuring plan by means of competitive bidding; and (iv) introduce certain special rules applicable to debt restructuring agreements entered into by distressed entities with obligations principally to banks and/or financial intermediaries. A more detailed discussion of the Decree can be accessed here.

Canada, the US and the UK—On 25 June 2015, the US unit of defunct Canadian telecommunications company Nortel Network Inc. ("Nortel") and its creditors asked US Bankruptcy Judge Kevin Gross and Justice Frank Newbould of the Ontario Superior Court to adjust 12 May 2015 rulings that allocated US$7.3 billion in proceeds realised from Nortel's liquidation among the company's Canadian, US and European divisions. In their motion for reconsideration, Nortel's US arm and its creditors argued that the allocation scheme unfairly shortchanges Nortel's US bankruptcy estate. However, the motion did not seek to override the pro-rata allocation scheme. On 6 July 2015, Judge Gross dealt a stinging defeat to US interests when he denied the reconsideration motion in large part and rejected most of the movants' requests for clarification of the landmark joint allocation ruling.

Canadian Justice Newbould also handed down a ruling on 6 July 2015 in which he agreed in all respects with Judge Gross' decision largely rejecting US calls for reconsideration and clarification. In his opinion, Justice Newbould was highly critical of the US Nortel debtors for attempting to raise new arguments that they declined to raise at trial for "tactical" reasons. He also expressed skepticism regarding suggestions by the US debtors that the UK pension claim amount is inflated.

On 9 July 2015, the official unsecured creditors' committee in Nortel's US bankruptcy cases filed a notice that it intends to appeal Judge Gross' allocation decision as well as his ruling on the motion for reconsideration to the US District Court for the District of Delaware. Any appeal of the Canadian ruling will be heard in a Canadian appellate court.

On 30 July 2015, Judge Gross denied the request of Nortel's Canadian units and their court-appointed monitor to certify an appeal of his allocation ruling directly to the US Court of Appeals for the Third Circuit, thereby skipping any intermediate appellate review by a federal district court. In his order denying the motion, Judge Gross stated, among other things, that immediate appeal to the Third Circuit would not materially advance the case.

On 27 August 2015, Judge Richard Snowden of the UK High Court of Justice, Chancery Division, explained his reasoning for allowing 19 worldwide affiliates of Nortel, including Nortel Networks UK Ltd., to begin evaluating and quantifying their claims to US$7.3 billion in proceeds of the bankrupt telecom's assets. The judge did so with the knowledge that prior rulings by US Bankruptcy Judge Gross and Ontario, Canada, Justice Newbould regarding allocation of the proceeds could be altered on appeal. Judge Snowden will oversee a claims resolution process for Nortel Networks U.K. Ltd., Nortel Networks Hispania SA, Nortel Networks (Austria) GmbH, Nortel Networks SRO, Nortel Networks S.A., Nortel Networks Engineering Services KFT, Nortel Networks (Ireland) Ltd., Nortel GmbH, Nortel Networks France SAS, Nortel Networks Oy, Nortel Networks Romania SRL, Nortel Networks Portugal SA, Nortel Networks AB, Nortel Networks International Finance and Holding BV, Nortel Networks NV, Nortel Networks Slovensko, Nortel Networks S.P.A., Nortel Networks BV and Nortel Networks Polska SP.Z.O.O.