From 30 April 2021, an administrator will be unable to complete a sale of a substantial part of a company's property to a connected person within the first eight weeks of the administration without either:
- The approval of creditors
- An independent written opinion (positive or negative)
This alert considers the impact of the new regulations in practice, which apply to both pre-packs and post-packs that take place within eight weeks of an administrator's appointment.
Introduction
Background to the case
The Company's case for appointing an examiner
The controversy
The decision
The implication for use of CVAs in England
In the third (and final) of our blog series on recent CVA cases, in Rhino Enterprises Properties Ltd & Anor [2020] EWHC 2370 (Ch), the High Court gave permission for misfeasance proceedings to be brought against two former joint administrators. This was despite an approved Company Voluntary Arrangement (“CVA”) containing a clause releasing the joint administrators from liability.
Increasing pressures placed on those operating in the retail and hospitality sectors as a result of COVID-19, means there is likely to be an increasing use of CVAs in these sectors. The intention would be to help support and restructure businesses in distress, but could retailers use a CVA as a mechanism to re-write the terms of its leases?
The COVID-19 pandemic has exacerbated the problems faced by high-street retailers. Store closures during lockdown, changing consumer behaviour and the resultant loss of turnover and profits have caused many businesses to seek to reduce their rent payments. Company Voluntary Arrangements (“CVAs”) have become fashionable tools for trying to secure such rent reductions.
The Australian chapter of GRR’s Asia-Pacific Restructuring Review 2021, authored by Herbert Smith Freehills, is now available and reproduced below.
This latest edition covers major Australian legislative developments, transactions and case law relating to restructuring and insolvency in Australia over the past 12 months including:
Legislation
- Temporary COVID-19 insolvency law amendments
- Anti-phoenixing amendments to the Corporations Act
Key restructurings
On 26 November 2020, The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020 (the “Regulations”) came into force.
We are pleased to announce the publication of the third edition of the Herbert Smith Freehills Guide to Restructuring, Turnaround and Insolvency, Asia Pacific.
Against a backdrop of the COVID-19 pandemic and the resulting economic downturn, we are seeing companies and lenders respond to a new and challenging business environment. The challenges associated with this new environment are further exacerbated as the influencing factors change in nature and intensity.
The Australian Federal Government has announced significant insolvency law reforms that will affect small businesses with liabilities of less than $1 million. The reforms are expected to commence on 1 January 2021 and will introduce, among other measures, a new debt restructuring process and liquidation pathway for small businesses which the Government intends to be simpler, more flexible and more efficient than existing processes.
In brief
The Australian Federal Government has announced the temporary amendments to insolvency and corporations laws will be extended until 31 December 2020 in light of the continuing challenges of COVID-19.
In brief