FSA announced on 31 October that MF Global UK Limited had entered into special administration. It noted this is the first time the special administration regime has been initiated since it took effect in February 2011, and summarised the benefits of the regime. In particular, it highlighted that the regime should facilitate swift return of client assets and timely engagement with market infrastructure. (Source:FSA Announces MF Global Administration)
Treasury is consulting on implementation of the changes to the Settlement Finality Directive (SFD) and the Financial Collateral Directive (FCD) in the UK. The changes to the Directives cover:
The Investment Banking Insolvency Panel of the FMLC has responded to Treasury’s consultation on developing effective resolution arrangements for investment banks. The response is wide-ranging and looks at clarity, transparency and access before setting out views on client assets and insolvency processes.
This round-up collates the information, analysis and guidance relating to insolvency issues shared by our Construction and Restructuring, Insolvency and Bankruptcy teams during the COVID-19 pandemic. For further information on any of the issues below, please get in touch with one of the Key Contacts.
In this article, Dentons gives its inside view on the pre-pack evaluator's report, made compulsory earlier this year to improve the confidence of creditors in pre-pack administration sales to connected persons. We consider the practicalities of selecting the right evaluator for the job, the potential for "opinion shopping" from evaluators and whether these new regulations have achieved what was intended.
A recap on pre-packs
The UK government introduced the Corporate Insolvency and Governance Bill (CIGB) to Parliament on 20 May 2020. As well as including temporary measures to help support businesses affected by COVID-19, it proposes significant permanent changes to UK insolvency law. These proposed permanent changes include a new company moratorium: a mechanism to give a company in financial difficulty a temporary breathing space against creditor action, during which the directors remain in control, but overseen by a monitor.
(1) Citicorp Trustee Company Limited and (2) Golden Belt Sukuk Company BSC v. (1) Maan Al-Sanea and (2) Saad Trading, Contracting and Financial Services Co [2017] EWHC 2845 (Comm)
In this case, the High Court considered whether valid service had been effected upon two defendants based outside of the jurisdiction who had shown no willingness to be involved in the proceedings.
FMLC has written two letters to Treasury regarding bank recovery and resolution:
The case concerning the Game group of companies' administration has now been played out in the Court of Appeal and the eagerly anticipated judgment has been handed down.
The issue at stake concerned a landlord's ability to recover rent as an expense of administration (and therefore payable before other creditors) where such rent is payable in advance but where the tenant's administration occurs immediately before a quarter day's rent falling due.
In Re JT Frith Limited [2012] EWHC 196 (Ch):
- the terms of an intercreditor agreement; and
- some unwitting help from the junior creditors,
enabled a senior secured lender to benefit indirectly from the prescribed part on the insolvency of its debtor.
Existing law at a glance
The Enterprise Act 2002 introduced the prescribed part under a new section 176A(2) of the Insolvency Act 1986. It reserves part of the floating charge recoveries for unsecured creditors.
Since then, the courts have held that: