A company voluntary arrangement (CVA) is a tool which has been widely utilised by companies seeking to restructure and compromise liabilities.

In recent years CVAs have been in the limelight because of attacks by landlords who feel that they have been unfairly prejudiced by the CVA terms. Largely, challenges such as those to the Regis and New Look CVAs have been unsuccessful, but arguments about unfair prejudice based on “vote swamping” were left open for future debate.

Dispute Resolution analysis: Following a liability trial, an unfair prejudice petition under section 994 of the Companies Act 2006 has been dismissed. None of the alleged instances of unfair prejudice directed against the Respondents was made out.

Pickering v Hughes and ors [2022] EWHC 3359 (Ch)

What are the practical implications of this case?

Where a commercial property is sold by a receiver or insolvency practitioner (IP), VAT must be charged on the sale if the owner had exercised and properly notified an option to tax (OTT) in respect of the property. The IP acting on behalf of the seller needs to establish whether an OTT has been made and notified so that VAT is charged , if needed.  This can be difficult if company records are in disarray, directors of the insolvent company are non-cooperative and/or the IP or receiver has limited knowledge of the property and company.

Dispute Resolution analysis: When the owners and controllers of a company refused to identify the recipient of payments made out of the company during the course of arbitration proceedings, their defence to a claim under section 423 of the Insolvency Act 1986 was struck out and judgment was entered against them.

Integral Petroleum SA v Pretrogat FZE and ors [2023] EWHC 44 (Comm)

What are the practical implications of this case?

Following the sanctioning of the Good Box restructuring plan (RP) it seems the answer is yes. This might sound surprising to those familiar with schemes of arrangement, because that outcome is at odds with the long-standing decision in Re Savoy Hotels.

For those less familiar with schemes and scheme case law, the court declined to sanction the Savoy scheme because the company did not approve it, consequently the judge found that the court had no jurisdiction to sanction it.

Dispute Resolution analysis: A Court, cost-managing a claim under s423 of the Insolvency Act 1986 has strongly criticised the level of anticipated costs reflected in cost budgets and have made an order reflecting the view formed.

Lemos and ors v Church Bay Trust Company Limited [2023] EWHC 157 (Ch)

What are the practical implications of this case?

It is difficult to predict what 2023 might hold for businesses in the UK. Given the difficult economic environment, many will already be facing a challenging start to the year. Although the challenges of the pandemic (such as lock downs) have gone, others have materialised. Energy price hikes and inflation rises continue to make trading conditions tough.

Dispute Resolution analysis: A large award of damages and/or equitable compensation has been made against the directors and connected companies of a company which was used to perpetrate a large scale labour supply fraud against HMRC.

Umbrella Care Ltd v Nisa and ors [2022] EWHC 3139 (Ch)

What are the practical implications of this case?

Can a Company Voluntary Arrangement (“CVA”) complete, but still remain in place and bind creditors?

The simple answer is yes; but it does require (a) the terms of the CVA to be carefully drafted to allow notice of completion to be filed before the end of the CVA term; (b) compliance with the terms of the CVA, and (c) careful consideration of the position of the supervisors, creditors and company.

The Insolvency and Companies Court has recognised Chapter 11 Proceedings in the US in respect of the manufacturer of controversial surgical mesh products which have generated a significant number of claims worldwide. The British Claimants have had their claims stayed as a result of this recognition.

Re Astora Women’s Health LLC [2022] EWHC 2412 (Ch)

What are the practical implications of this case?