In the last week we have seen MPs criticise accountancy firms, KPMG, Deloitte, EY and PWC in their first report on the collapse of Carillion, describing the big four as “a cosy club” and calling for the firms to be forcibly broken up. Whilst not suggesting that the firms were to blame for the collapse, it is the level of fees reportedly paid to the firms which caught the MPs attention– £72 million in 10 years.

Bankruptcy & restructuring

The economies of the United States (U.S.) and Canada are closely intertwined. As operations expand across the border, so too do the complexities associated with carrying on business — particularly the insolvency of a company spanning both jurisdictions. As such, understanding how to navigate the complexities of Canadian insolvency regimes is essential to successfully doing business in the country.

1. Legislation and court system

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.

Air Berlin, one of Europe’s largest airlines, filed for insolvency on 15 August 2017. The airline, which is Germany’s second-largest carrier after Lufthansa, filed following the decision by Etihad Airways to pull financial support. Etihad owns 29% of Air Berlin and had been pumping money into the struggling airline for the past 6 years.

As of 25 April 2017, for courts within the Chancery division of the High Court in London, the filing of all applications, forms and documents must be performed electronically. This includes the Bankruptcy and Companies Courts within Greater London. It does not apply to the High Courts outside London.

The uncertainties of the UK’s Brexit negotiations with the remaining 27 EU member states are weighing heavily on the UK economy. The 2 years of negotiations will not even begin until notice is served under Article 50 and the procedure as to how Article 50 can be triggered will be the subject of a Supreme Court decision expected later this month.

The case ofBailey v Angove’s Pty Ltd heard in the UK Supreme Court has confirmed the general rule that an irrevocable agency will only be created in exceptional circumstances: there must be a specific agreement that the agent’s authority is irrevocable and the authority must be given with the intention of securing an interest of the agent.

The Pension Protection Fund (PPF) is reviewing its insolvency risk model with Experian. The proposals being considered are particularly relevant to the financial services and charity sectors. It is proposed they be introduced from 2018/2019 (and will not be part of the draft levy rules and levy estimate for 2017/18, which we expect will contain few changes).

In summary, the PPF is considering:

The Court of Appeal has recently considered the status of contingent assets within the balance sheet test for insolvency in the context of a company’s inability to pay its debts. Under Section 123 Insolvency Act 1986, a company is deemed unable to pay its debts if its assets are less than its liabilities including contingent liabilities but nothing is said about the status of contingent assets.

Until recently the oil and gas sector has not been on the restructuring communities radar. However, last year global oil prices hit an all-time low, which led to a record number of insolvencies in the industry. Consequently in conjunction with Lexis Nexis we have produced the Guide to insolvency in the UK oil and gas industry.