Lending to a foreign company? If you choose English law to govern your facility documents and provide for the English court to have exclusive jurisdiction, an English scheme may be a viable means of restructuring the debt later, if the need arises.

FMLC has responded on aspects of Treasury’s consultations on resolution of investment banks. The paper’s main recommendations include:

The US Court has approved a bankruptcy settlement under which a US-listed parent company is liable for the buy-out deficits in its UK subsidiary's pension schemes. Key to the court's considerations was the issue of Financial Support Directions (FSDs) by the UK Pensions Regulator against the US parent company.

The court decided that:

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.

Gurbinder Grewal and Michael Wright in the UK Construction Team explain the knock on effects of insolvencies and the mitigating steps that can be taken. Early warning signs of looming insolvency can be spotted.

Key points

A recent challenge in the High Court by liquidators to recover assets from a director of an insolvent company has highlighted various points of company law. In particular, the court had to consider directors' authority, share buybacks, and transactions between a company and its directors.

The claimant (D) was the managing director and controlling shareholder of the defendant company (the Company). The Company at first had one other director, D's wife, and later a second (W).

The liquidator challenged three transactions:

Kandola v Mirza Solicitors LLP [2015] EWHC 460 (Ch)

A recent decision of HHJ Cooke in the Chancery Division of the High Court in Kandola v Mirza Solicitors LLP [2015] EWHC 460 (Ch) has provided some useful guidance on solicitors' duties to advise as to the risk of insolvency of the vendor when acting for purchasers in property transactions where deposits are held as agents for the vendor. It also provides guidance on solicitors' duties generally when advising on risks in transactions.

The Facts

The insolvency of the borrower is a standard event of default in facility agreements. As well as covering the borrower's cash flow insolvency, these clauses also often cover other, earlier signs of distress. Two recent cases have seen lenders try to exploit these outer reaches of their insolvency event of default clauses. Hayley Çapani and Adam Pierce explain why these cases are significant for parties negotiating new deals, and for lenders considering their enforcement options on existing deals.

Negotiations with creditors for rescheduling

FSA has won a case in the High Court in which the court held one individual and two businesses were operating a collective investment scheme without authorisation. The court banned James Maynard from selling land for business purposes in the UK for life and made a bankruptcy order against him. It ordered him and Countrywide Land Holdings Limited to pay £31,896,194 to FSA and ordered Plateau Development & Land Limited, now in liquidation, to pay £918,975. Tracey McDermott said there was a low probability of getting meaningful compensation but that FSA had scored an important victory.

FSA has published guidance on cooperation between recognised bodies and insolvency practitioners. The guidance looks at how the exchanges and clearing houses can work with insolvency practitioners to manage member defaults. (Source: Cooperation Guidance on Member Defaults)