The perceived costs of proposing a restructuring plan are seen to be the biggest inhibitors to using the process for SMEs. It is still a relatively new tool and insolvency practitioners, lawyers and the courts are still grappling with it, but as we have seen recently in Amigo Loans it can provide creative and innovative restructuring solutions[1].

Following a July 6, 2022 memorandum opinion from the United States Bankruptcy Court for the District of Delaware, lenders and noteholders seeking to preserve the priority of their liens must make any desired subordination protections explicit in their security documents. Judge Craig T. Goldblatt’s decision in In re TPC Group Inc. upholds a prepetition “uptier” transaction and narrows the issues before the Bankruptcy Court regarding TPC Group Inc.’s desired entry into a debtor-in-possession loan with an ad hoc group of noteholders over the dissent of minority holders.

It is often the case, that insolvency claims are pursued against former directors of the insolvent company or persons connected to them. It is also often the case, that such claims are assigned to a litigation funding company given lack of funds in the insolvent estate to pursue them. This is what happened in Lock v Stanley where various claims against the former directors, their parents and connected company were assigned to Manolete.

On March 14, 2022, the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) revisited the issue of the rejection of filed-rate contracts in bankruptcy where such contracts are governed by the Federal Energy Regulatory Commission (“FERC”). The ruling marks the first time the Fifth Circuit has addressed this issue since its 2004 decision in In re Mirant Corp.¹ In Federal Energy Regulatory Commission v.

A recent order from the United States Bankruptcy Court for the Southern District of Texas (the “Court”) allowed a debtor to reopen a completed auction based on a significantly more attractive, but untimely, bid. The late bid was approximately three times the cash consideration of the previously declared winning bid, and also provided for the additional containment of potential environmental risks. The decision is being appealed to the United States District Court for the Southern District of Texas (the “District Court”).

Throughout the pandemic we have seen a succession of temporary practice directions, enabling practitioners to deal with the swearing of notices of intention (NOI) and notices of appointment (NOA) of administrators remotely, as well as answering a question which the judiciary had grappled with several times – when does a notice of intention or notice of appointment come into effect if filed outside of court hours?

Opening the door for the SME market, Sir Alistair Norris has sanctioned the first ever restructuring plan for a “mid-market” company. The plan sanctioned in Amicus Finance PLC (in administration) is also the first restructuring plan proposed by insolvency practitioners and the first to cram down a secured creditor.

The sanction judgment is short, but the adjourned convening hearing that was dealt with by Mr Justice Snowden (the first hearing was before Mr Justice Trowers) gives some insight into the plan.

There is a faint light at the end of the COVID tunnel for commercial landlords regarding timings and the ability to recover unpaid rent arrears. The UK Government has announced an extension to the current prohibition on forfeiture and winding up petitions, to enable it to introduce new legislation to help manage the £6bn estimated rent arrears.

The announcement provides a clearer pathway for both landlords and tenants, many of whom have paid no, or little rent since March 2020 as a consequence of the various Government imposed lockdowns.

The recent case of Manolete Partners Plc v Hayward and Barrett Holdings Ltd [2021] EWHC 1481 (Ch) impacts both insolvency practitioners and assignees of insolvency claims, potentially making such claims more expensive to bring and a procedural burden by requiring (depending on the nature of the pleaded claims) two sets of proceedings, even though the claims arise from the same facts.

The Corporate Insolvency and Governance Act 2020 introduced a number of temporary changes to UK insolvency laws last year. Those changes, together with other measures such as the moratorium on forfeiture proceedings have recently been extended, we assume, to avoid the perceived cliff edge of insolvencies that might follow if such measures are brought to an end abruptly.