Introduction
Today, the UK Supreme Court considered for the first time the existence, content and engagement of the so-called “creditor duty”: the alleged duty of a company’s directors to consider, or to 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.
The High Court in London gave judgment on Friday, 3 July 2020 on the relative ranking of over $10 billion of subordinated liabilities in the administrations of two entities in the Lehman Brothers group.
Reforms to the Corporate Restructuring and INsolvency Framework
Moratorium
The Bill introduces a moratorium for companies during which they will benefit from a ‘payment holiday’ in respect of certain pre-moratorium debts and protection from legal action and security enforcement without the court’s permission.
Following a number of corporate governance failures in situations of insolvency, the Government has published a consultation paper (located here) aimed at cracking down on directors and employers behaving irresponsibly.
Article Summary:
In Wright (and another) (as joint liquidators of SHB Realisations Ltd (formerly BHS Ltd) (in liquidation)) v Prudential Assurance Company Ltd, the court held that, when the BHS CVA terminated, the landlord was entitled to claim the full rent due under its lease. With more recent retail CVAs seeking to push the envelope even further, is the continued compromise of landlord creditors post-CVA the next issue to be tested in the courts?
Summary: Following a number of corporate governance failures, the Government has published a consultation paper aimed at cracking down on directors and employers behaving irresponsibly. “These reforms will give the regulatory authorities much stronger powers to come down hard on abuse and to make irresponsible directors bear the consequences of their actions.” Greg Clark. Responses are required by 11 June 2018.
Sale of Businesses in Distress
Summary: In Wright (and another) (as joint liquidators of SHB Realisations Ltd (formerly BHS Ltd) (in liquidation)) v Prudential Assurance Company Ltd, the court held that, when the BHS CVA terminated, the landlord was entitled to claim the full rent due under its lease. With more recent CVAs seeking to push the envelope even further, is the continued compromise of landlord creditors post-CVA the next issue to be tested in the courts?
The recent decisions in Re MF Global UK Ltd and Re Omni Trustees Ltd give conflicting views as to whether section 236 of the Insolvency Act 1986 has extra-territorial effect. In this article, we look at the reasoning in the two judgments and discuss a possible further argument for extra-territorial effect.
The conflicting rulings on section 236
When being sued, corporate and individual defendants should always confirm that the plaintiff has not been previously discharged in bankruptcy and failed to disclose the claim in the proceeding as an asset of the bankruptcy estate. In Guay v. Burack, 677 F.3d 10 (1st Cir. 2012), the plaintiff brought numerous claims against various governmental entities, governmental officials and a police officer.
Masuda, Funai, Eifert & Mitchell routinely represents creditors in bankruptcy proceedings in order to protect their contractual and legal interests and rights to payment. The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.
AUTOMOTIVE