In September 2023, the insolvency administrator of the insolvent Wirecard AG began reclaiming dividend distributions for 2017 and 2018 from shareholders. This is following a judgment of the Federal Court of Justice (BGH) in March 2023 (BGH judgment of March 30, 2023 – IX ZR 121/22). In that judgment the BGH ruled that in the event of a company’s insolvency, the insolvency administrator can demand back dividend payments made to shareholders for up to four years pursuant to section 134 (1) of the Insolvency Code (InsO).
The European Markets in Crypto-Assets Regulation (Regulation (EU) 2023/1114 – MiCA), which entered into force on 29 June 2023, is a significant new regulation that will impact the treatment of cryptocurrencies and digital assets. MiCA requires the European Securities and Markets Authority (ESMA) to develop a series of regulatory technical standards (RTS) and implement technical standards (ITS) and Guidelines. Many of these regulations are to be developed in close cooperation with the European Banking Association (EBA).
What is the so-called "creditor duty"?
This is the duty, introduced into English common law by the leading case of West Mercia Safetywear v Dodd1 in 1988, of company directors to consider, or act in accordance with, the interests of the company's creditors when the company becomes insolvent, or when it approaches, or is at real risk of insolvency.
Background
UK Supreme Court gives important judgment on directors’ “creditor duty”
The UK Supreme Court in BTI 2014 LLC v Sequana SA and ors [2022] UKSC 25[1] has given an important judgment clarifying the nature of the so-called “creditor duty.” The “creditor duty” is an aspect of the fiduciary duty of directors to act in the interests of their company which requires the directors to take into account the interests of creditors in an insolvency, or borderline insolvency, context.
On 22 July 2022, the English High Court sanctioned Houst Limited’s (“Houst” or the “Company”) restructuring plan (the “Restructuring Plan”), which significantly, is the first time a Restructuring Plan has been used to cram down HM Revenue & Customs (“HMRC”) as preferential creditor.1
Background
The recently published Financial Services and Markets Bill (FSM Bill) is intended to recast the U.K.’s regulatory architecture post-Brexit. It was introduced to Parliament on 20 July 2022. The Bill implements the outcomes of the Future Regulatory Framework Review, which assessed whether the U.K.
The recently published Financial Services and Markets Bill (FSM Bill) is intended to recast the U.K.’s regulatory architecture post-Brexit. It was introduced to Parliament on 20 July 2022. The Bill implements the outcomes of the Future Regulatory Framework Review, which assessed whether the U.K.
Two years on: review of CIGA permanent measures
Since our last blog on this topic, the English court has provided further guidance on certain key issues and novel features relevant to restructuring plans and schemes of arrangement in its recent judgments on Amigo Loans, Smile Telecoms, EDF & Man, Re Safari Holdings (Löwen Play) and Haya. This piece provides an overview of key points from these cases.
Government support during the pandemic and extremely strong credit markets saw exceptional fund raising levels in 2021, in spite of a slower Q4. Borrowers secured increasingly favourable terms from their lenders, with only a little pushback as the year progressed. Private credit continued to compete for greater market share and found interesting opportunities in smaller and more complex names. 2021 has proved to be a record year for financings and the continued availability of cheap capital, with reasonable stability and outperformance from riskier credits.