As always, there has been a lot going on in insolvency.  We have highlighted below a few of the more important developments that we have seen in a very busy 2020 for insolvency lawyers. 

Re Tokenhouse VB Ltd (Formerly VAT Bridge 7 Ltd) [2020] EWHC 3171 (Ch)

The challenges facing the businesses of the United Kingdom at the start of 2021 are perhaps greater than any of us have seen in our lifetimes. In addition to the economic consequences of the restrictions on daily life imposed to counter Covid-19, we are now seeing the effects of the exit of the UK from the EU with businesses having had little time to get up to speed on the new regime.

I have obviously been a good boy this year because my gift from the Insolvency Service has arrived - the November 2020 Insolvency statistics. And like any properly brought up child, I decided to sneak a peek at my present before Christmas Day.

What the numbers show us is a continuation of the trend that the previous figures disclosed - corporate insolvencies remain markedly lower than the equivalent period last year. In Scotland in particular this is driven by a massive reduction in the number of compulsory liquidations this year (Nov 2019 - 56; Nov 2020 - 13).

Earlier this year the UK Government introduced a number of temporary measures intended to avoid large scale insolvencies across the country. One of these measures was the suspension of wrongful trading liability.

This suspension was in place until September 30, 2020. Most of the other temporary measures were extended (e.g. the effective suspension of winding up petitions by creditors has been extended until December 31, 2020) but the suspension of wrongful trading liability was not extended.

The Insolvency Service has released the latest insolvency statistics (to September 2020). 

These figures are particularly interesting as they shed light on the effects of the various changes to the insolvency landscape that have occurred since Covid-19 started to affect the economy.

Since March 2020, we have seen the introduction of the Corporate Insolvency & Governance Act ("CIGA"), Government schemes and lockdowns of various sizes, shapes and geographical restrictions. 

The statutory provisions for Restructuring Plans form a new Part 26A of the Companies Act 2006. CIGA was brought into force on June 26, 2020 and at a hearing in the High Court in London on September 2, 2020, the plan proposed by Virgin Atlantic, which was the first to be brought before the courts, was sanctioned.

Each year, millions of parents across America write checks to institutions of higher learning, in payment of tuition and charges for their children to pursue a college degree. Inevitably, some of those parents end up in the bankruptcy courts. In recent years, trustees have found an attractive potential source of estate recovery: pursuing the colleges and universities to recover tuition and related payments as constructive fraudulent transfers.

One of the fundamental elements of the American bankruptcy system is the automatic stay under section 362 of the bankruptcy code. The stay protects the debtor and its assets from creditor activity, in order to facilitate equitable treatment of creditors in the collective bankruptcy process. The remedies provided for violations of the stay allow the estate to enforce the protections provided by section 362.

A recent decision by Bankruptcy Judge Stuart Bernstein, made in connection with plan confirmation in the SunEdison bankruptcy case, strikes down non-consensual third-party releases on a variety of bases. The decision analyzes issues regarding subject matter jurisdiction, the circumstances of deemed consent, and the applicable substantive requirements for a non-consensual release.

For decades, restructuring and insolvency matters in the Dominican Republic involving merchants and companies in non-regulated industries have been carried out on a “de facto” basis, due to the obsolescence of the existing legal framework and institutions. Fortunately, that is not the case anymore.