Introduction

The UK Supreme Court has today handed down a significant and highly anticipated decision on the interpretation of liquidated damages clauses.

In this edition of the Going concerns, our Stephenson Harwood restructuring and insolvency team provides a brief update on the newest developments in Singapore, UK and Hong Kong. For Singapore, we update on the "conflict" between the admiralty and insolvency regimes while our London team provides an update on the cutting-edge Part 26A restructuring plans. Last but certainly not least, our Hong Kong team dissects and discusses the significance and impact of the new cooperation mechanism for Hong Kong liquidators and Mainland administrators to seek mutual recognition and assistance.

A recent decision has got the funding community talking and would, if times were different, have led to some water cooler moments. The decision is a mere 19 paragraphs long and, as will become evident, is perhaps as important for what it did not say as for what it did say.

On 28 June 2021, Zacaroli J declined to sanction a restructuring plan (the “Plan”) in respect of Hurricane Energy PLC (the “Company”) under section 901F of the Companies Act 2006 (“CA 2006”). The Company is part of a group whose business is extracting oil stored within fractures in solid rock beneath the sea.

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.

Responses to the HM Treasury call for evidence on the Review of Solvency II

On 1 July HM Treasury published a summary of the responses received to its autumn 2020 call for evidence on the Review of Solvency II.

HM Treasury comments

Many businesses are continuing to struggle as a result of the ongoing pandemic and while many will bounce back, unfortunately others may struggle. If your company’s solvency is at risk or could be in the future, as a director there are various legal issues and responsibilities you need to be aware of.

Here we take a look at directors duties.

What are director’s duties?

Generally, its directors owe the following duties to a company:

• to act bona fide in its interests

• not to act for any personal or collateral purpose

The motivation for the recent insolvency law reforms is to give insolvent companies breathing space to try to reorganise their affairs and allow viable businesses to continue to trade

With the threat of increased insolvencies as an effect of the COVID-19 pandemic remaining very real, the construction sector needs to be aware of the impact of changes to insolvency laws.

Changes to insolvency laws in the UK, Australia and Singapore may affect how parties deal with the termination of construction contracts where one party to the agreement is insolvent.

Last year the Corporate Insolvency and Governance Act (the Act) made both temporary and permanent changes to the UK insolvency laws.

As part of these measures, a provision was inserted into existing legislation which curtails the ability of suppliers to terminate supply contracts when a customer becomes insolvent (the so called `ipso facto regime').

One of the main differences in insolvency law between Scotland and England & Wales relates to the challengeable transactions regime under the Insolvency Act 1986.

In both jurisdictions, transactions that are entered into before a formal insolvency process begins can be attacked if they are detrimental to the creditors of the insolvent company. However, although both systems use similar language and address similar concerns, the law in the two jurisdictions is different, most notably with different time periods and defences to a challenge.