From 1 December 2020 onwards, HMRC will be treated as a preferential creditor of companies for certain taxes including PAYE, VAT, employee NICs and Construction Industry Scheme deductions. In the event that a company enters administration or liquidation, HMRC's claim for these taxes will rank ahead of any floating charge holder.
This reflects recent changes made to the Finance Act 2020.
The impact on floating charge holders
On 13 January 2021, the English High Court sanctioned three interconditional Part 26A restructuring plans for the subsidiaries of DeepOcean Group Holding BV.
The plans for two of the companies were approved by the required 75% majority. While the third plan received 100% approval by secured creditors, only 64.6% of unsecured creditors voted in favour.
Consequently, at the sanction hearing the court was required to consider whether the cross-class cram down mechanism in the restructuring plan should be engaged for the first time in the UK.
On 11 February 2021, the English High Court confirmed in gategroup Guarantee Limited that restructuring plans are insolvency proceedings so are not covered by the Lugano Convention.
One of the debt instruments subject to the gategroup restructuring plan contains an exclusive Swiss court jurisdiction clause. Under the Lugano Convention, proceedings relating to "civil and commercial matters" must generally be brought in the jurisdiction benefitting from the exclusive jurisdiction clause.
In Uralkali v Rowley and another [2020] EWHC 3442 (Ch) – a UK High Court case relating to the administration of a Formula 1 racing team – an unsuccessful bidder for the company's business and assets sued the administrators, arguing that the bid process had been negligently misrepresented and conducted.
The court found that the administrators did not owe a duty of care to the disappointed bidder. It rejected the claimant's criticisms of the company’s sale process and determined that the administrators had conducted it "fairly and properly" and were not, in fact, negligent.
In Uralkali v Rowley and another [2020] EWHC 3442 (Ch) – a UK High Court case relating to the administration of a Formula 1 racing team – an unsuccessful bidder for the company's business and assets sued the administrators, arguing that the bid process had been negligently misrepresented and conducted.
The court found that the administrators did not owe a duty of care to the disappointed bidder. It rejected the claimant's criticisms of the company’s sale process and determined that the administrators had conducted it "fairly and properly" and were not, in fact, negligent.
The European Commission has published a paper on its study covering pre-insolvency, early intervention, reorganisation and liquidation.
On 12 March 2010, the FSA published the statement that it had provided to the court appointed examiner of Lehman Brothers Holding Inc, which is referred to in his wider report on the collapse of Lehman Brothers.
View FSA statement to the US bankruptcy court examiner on the collapse of Lehman Brothers Holdings Inc, 12 March 2010
The FSA has published the statement that it has provided to the court appointed examiner of Lehman Brothers Holding Inc, which is referred to in his wider report on the collapse of Lehman Brothers published on 11 March 2010.
View FSA statement to the US bankruptcy court examiner on the collapse of Lehman Brothers Holdings Inc, 12 March 2010
HM Treasury has published a consultation paper which is entitled Special Resolution Regime: the draft FSMA (Contribution to Costs of Special Resolution Regime) Regulations 2010.
This consultation seeks views on all aspects of the draft Financial Services and Markets Act 2000 (Contribution to Costs of Special Resolution Regime) Regulations 2010 which will be made under the new FSMA provisions when clause 28 of the Financial Services Bill is enacted.
The deadline for comments on the consultation is 15 June 2010.
The FSA has published a short update on Lifemark S.A. (Lifemark). The FSA reports that on 11 February 2010, the Luxembourg financial services regulator, the Commission de Surveillance du Secteur Financier (the CSSF), applied to the Court in Luxembourg to extend the appointment of Eric Collard of KPMG as provisional administrator in respect of Lifemark.