Reverse cross border mergers could become a popular device for UK companies seeking to maintain and preserve “passporting” or other EU rights.

The mechanism of a reverse cross-border merger (in this context whereby a UK parent company merges with their continental European subsidiary) has not historically been permitted under English law. However the provisions of an EU directive implemented in the UK in 2007 changed that position giving UK company groups that option.

The English High Court in Lehman Brothers International (Europe) (In Administration) [2016] EWHC 2417 (Ch), in one of a series of cases arising from the Lehman insolvency, has had to consider (among other issues) the meaning of “Default Rate” under the ISDA Master Agreement.

Editor’s Note: Our good London colleague Ed Marlow recently published this as a Bryan Cave client advisory.

Including an unsecured creditor  in an agreed payments waterfall does not by itself confer on that unsecured creditor  the benefit of a mortgagee’s usual duties on enforcement of security, or a direct claim against the sale proceeds.

The English High Court in Fondazione Enasarco v Lehman Brothers Finance S.A. and Anthracite Rated Investments (Cayman) Limited [2015] EWHC 1307 (Ch) applied a common sense approach in the circumstances to the determination of Loss under the 1992 ISDA Master Agreement. The judgment of the judge (Mr Justice David Richards) is useful reading for those involved in structured products and derivatives.

Background

The English Court of Appeal decision in Caterpillar v John Holt & Company, and its analysis of “retention of title” and “no set-off” clauses, will be of interest to commodity traders, compliance officers and legal counsel in industries dealing with energy and natural resources internationally.

Over recent years in this economic climate, it has been increasingly common for distressed companies to be sold in an effort to rescue the entity. On first blush, this seems a relatively simple exercise although care is required to ensure that no unexpected tax charges arise, especially if there is restructuring of the debt. The taxation rules governing the end of business life are varied and complex and the sooner that thought is given to taxation in respect of the insolvent company the better this will be for the seller, the remaining group and for any buyer.

Some 13 years ago, Lehman Brothers' sudden and unexpected insolvency sent ripples across the banking and financial services market, some of which are still felt today.

The Court of Appeal's decision in the consolidated cases of Lehman Brothers Holdings Scottish LP 3 v Lehman Brothers Holdings plc (in administration) and others¹ [2021] EWCA Civ 1523 was the latest in a long line of cases seeking to unwind the issues arising from Lehman Brothers' unexpected collapse.

The background

The Corporate Insolvency and Governance Act ("the Act") came into expedited effect on 26 June 2020 and is intended to maximise the chance of corporate survival and reduce the threat of personal liability on directors during this unprecedented economic crisis.

D&O insurers should be clear about one thing: this Act will not help them and in fact it could well make things worse.

The Act

On 11 July 2019, HMRC published a policy paper discussing measures which are aimed at those  taxpayers who “unfairly seek to reduce their tax bill by misusing the insolvency of companies”.  This will be achieved by making directors and other persons connected to those companies jointly and severally liable for the avoidance, evasion or “phoenixism” debts of the corporate entity.

An explanatory note and draft legislation set out the conditions that must be satisfied in order to enable an authorised HMRC officer to issue a “joint liability notice” to an individual.