Introduction
On 28 March 2020, the Business Secretary, Alok Sharma, announced new insolvency measures to support companies under pressure as a result of the COVID-19 outbreak. In summary, the government is due to: (i) implement the landmark changes to the corporate insolvency regime that were announced in August 2018 (as discussed in Weil’s European Restructuring Watch update on 7 September 2018); and (ii) temporarily and retrospectively suspend wrongful trading provisions for three months.
Proposed Changes to the Corporate Insolvency Regime
Background
On 6 March 2020, the restructuring of Doncasters Group's 1.22 billion funded debt was completed. Following a successful non-core disposals program, the Doncasters Group (a leading worldwide supplier of high quality engineered components for the aerospace, industrial gas turbine and specialist automotive industries) operates from 12 principal manufacturing facilities based across the United Kingdom, the United States, Germany, Mexico and China.
Among the many protections afforded creditors under the Bankruptcy Code is the estate’s ability to avoid transfers made before the petition date that benefit certain creditors at the expense of others. These so-called avoidance actions are primarily governed by Sections 544, 547 and 548 of the Bankruptcy Code, which set forth the requirements for challenging prepetition transfers as preferential or fraudulent.
Over the last two years, BEIS has issued a number of consultations either focussed on, or touching upon, corporate governance issues in insolvency or the broader insolvency framework.
Key Employee Retention Plans (KERPs) and Key Employee Incentive Plans (KEIPs) often are the subject of intense interest, either because a distressed company’s management is focused on developing such programs to retain valuable talent during a time of great uncertainty within its organization or because certain creditor constituencies or parties in interest take issue with the payments a debtor intends to make under the programs.
What happens when the counterparties on both sides of a contract are debtors in separate bankruptcy cases and their estates have contrary views about whether to reject or assume a contract?
As avid blog readers know, we’ve posted extensively on make whole issues, including several articles covering the ongoing make whole litigations in the chapter 11 cases of Energy Future Holdings and its affiliated debtors, which can be found here,
Are you feeling a bit of déjà vu? We certainly are. As readers know, here at the Weil Bankruptcy Blog we’ve written extensively about make-wholes. In two previous posts, What the Future Holds for Make-Whole Claims in Bankruptcy: Examining the Energy Future Holdings EFIH First Lien Make-Whole Decision –