The English courts have recently wrestled with the Cross Border Insolvency Regulations 2006 (“CBIR”) in a case about the lifting of the automatic stay on proceedings against Korean company STX Offshore & Shipbuilding Co Ltd

CVAs are a useful tool in the restructuring tool kit, and may prove extremely helpful to retailers or hospitality companies as a means of supporting those businesses as they emerge from the pandemic. The flexibility of a CVA and the ability to shape the terms of a proposal to meet the specific needs of a business have seen an increasing number of consumer led businesses use CVAs, and they have become popular as a means to restructure businesses that have a significant lease portfolio.

The recent Chancery Division judgment in Re Gracio Property Company Limited [2017] B.C.C 15 (“Gracio”) saw the court make an order for a compulsory liquidation without any winding-up petition having been issued.

The facts

Following our previous alert that considered rent reductions and modifications to lease terms post New Look and Regis, this alert considers what those CVA challenge cases tell landlords about calculating a landlord's claim for voting purposes and the disclosure requirements.

In the recent case of Gillan v HEC Enterprises Ltd (in administration) and Ors [2016] EWHC 3179 (Ch), the High Court considered (1) in what circumstances administrators can recover costs and expenses incurred in dealing with trust property and (2) how the administrators’ costs in applying for a Berkeley Applegate order and other litigation were to be dealt with.

Background

CVA challenges have been in the spotlight recently and the story continues with Nero Holdings Ltd v Young in which the court considered an application to strike out a CVA challenge claim. Although there is nothing ground-breaking in the court’s reasoning to dismiss the strike out/summary judgment application, its detailed reasoning will offer some helpful guidance and assistance to those involved in these applications.

The English Court has agreed to lift the automatic stay on proceedings under the Cross Border Insolvency Regulations 2006 (“CBIR”) against STX Offshore & Shipbuilding Co Ltd (“STX”) which had entered into rehabilitation proceedings in Korea.

Facts

From 30 April 2021, an administrator will be unable to complete a sale of a substantial part of a company's property to a connected person within the first eight weeks of the administration without either:

• The approval of creditors
• An independent written opinion (positive or negative)

This alert considers the impact of the new regulations in practice, which apply to both pre-packs and post-packs that take place within eight weeks of an administrator's appointment.

When is an evaluator's report required?

Over the past few months, we have commented on the steel industry crisis and some of the employment law issues arising from it in the context of insolvency.

The pandemic and various lockdowns have been tough on the landlord community. The last few days have not made that any easier. First, the New Look decision dismissed the challenge mounted by a number of landlords (see our blog here ). Then on 12 May 2021 the landlord community was dealt another blow by the outcome of the restructuring plan (“RP”) in Virgin Active.