Credit bidding is a mechanism, enshrined in the US bankruptcy legislation, whereby a secured creditor can ‘bid’ the amount of its secured debt, as consideration for the purchase of the assets over which it holds security. In effect, it allows the secured creditor to offset the secured debt as payment for the assets and to take ownership of those assets without necessarily having to pay any cash for the purchase. Whilst there is no statutory equivalent in the UK, the process has evolved here into an accepted practice.
On March 28, 2020[1], the UK Government announced that it will introduce new legislation extending the UK’s existing restructuring and insolvency laws to include:
When any industry faces challenging times, thoughts turn to what might happen to those companies which are unable to maintain their solvency and service their existing debt.
The Court has heard another case dealing with a defective appointment of administrators under paragraph 22 of Schedule B1 Insolvency Act 1986 (“Schedule B1”)1. Following hot on the tail of a recent series of conflicting cases relating to defective appointments, the Court has held that:
In a decision which has not yet been confirmed by the German Federal Court, the Higher Regional Court of Celle (an appellate court) has decided that a German policyholder of UK life insurer Equitable Life is not protected by a scheme of arrangement which had been approved by the London High Court in February 2002 (OLG Celle 8 U 46/09 from 8 September 2009). The claimant had challenged that, following the scheme of arrangement, he would have had received lesser profit payments. A final decision of the German Federal Court is expected at the end of 2010.
On 7 January 2013, the Regulator published a report detailing its decision to give clearance to entities in the UK Coal Group to pursue a restructuring plan agreed on by UK Coal's shareholders in November 2012.
The Pensions Regulator (the "Regulator") has published a statement to help banking, insolvency and restructuring professionals understand its approach to its Financial Support Direction ("FSD") powers in insolvency situations.
In October 2009 the Greek airline, Olympic Airlines SA ("OA"), entered "special liquidation" in Greece after the European Commission ordered it to repay illegal state aid from the Greek Government. OA employed about 27 employees in the UK, who participated in an occupational pension scheme. In June 2010 OA's liquidator informed the scheme's trustees that the UK employees' employment would be terminated and that pension contributions would cease from July 2010.
In September 2010, the Determinations Panel of the Regulator (the "DP") issued financial support directions ("FSDs") against six companies in the Lehman Brothers Group, but determined that no FSDs would be issued against 38 other companies in the group. The trustees of the Lehman Brothers Pension Scheme appealed the decision not to issue FSDs against these 38 companies to the Upper Tribunal. However, the companies applied for the trustees' appeal to be struck out.
On 29 February 2012, the Supreme Court of the United Kingdom handed down its long-awaited judgment on client money issues in the context of the Lehman's Administration. The judgment has an important bearing on likely recoveries for both segregated and non-segregated clients, the further work to be conducted by the Administrators and timing of distributions.
Summary
The Supreme Court has found that: