In Arlington Infrastructure Ltd (In administration) and another v Woolrych and others [2020] EWHC 3123 (Ch), the Court considered the meaning of a deed of priority entered into between the senior and junior secured creditors of Arlington Infrastructure Limited (AIL). The junior creditors (but not the senior creditor) also held debentures over AIL's subsidiary companies.
The ability of a bankruptcy trustee to avoid certain transfers of a debtor's property and to recover the property or its value from the transferees is an essential tool in maximizing the value of a bankruptcy estate for the benefit of all stakeholders. However, a ruling recently handed down by the U.S. Court of Appeals for the Tenth Circuit could, if followed by other courts, curtail a trustee's avoidance and recovery powers. In Rajala v. Spencer Fane LLP (In re Generation Resources Holding Co.), 964 F.3d 958 (10th Cir. 2020), reh'g denied, No.
In a widely criticised move, the UK tax authority, HMRC, has become a second ranking preferential creditor regarding certain taxes in insolvency proceedings commenced on or after 1 December 2020.
This means that in the new insolvency waterfall, HMRC ranks behind the claims of holders of fixed charges and first ranking preferential creditors (most notably employees) but ahead of floating charge holders' claims and unsecured creditors.
The UK government has published new draft regulations to require mandatory scrutiny of administration sales to connected parties (such as the insolvent company’s existing directors or shareholders).
In the UK, a "pre-pack" is an arrangement under which the sale of all or part of a company’s business or assets is agreed with a purchaser prior to the appointment of administrators. The sale is carried out by the administrators immediately on, or shortly after, their appointment. Administrators must be licensed insolvency practitioners.
Introduction
Derivative Standing
Dura Automotive
The Bankruptcy Court's Ruling
The McClatchy Company
Outlook
The practice of conferring "derivative standing" on official creditors' committees to assert claims on behalf of a bankruptcy estate in cases where the debtor or a bankruptcy trustee is unwilling or unable to do so is a well-established means of generating value for the estate from litigation recoveries. However, in a series of recent decisions, the Delaware bankruptcy courts have limited the practice in cases where applicable non-bankruptcy state law provides that creditors do not have standing to bring claims on behalf of certain entities.
As part of its pandemic-driven £1.2 billion solvent recapitalisation, Virgin Atlantic recently became the first company to use the UK government's new restructuring plan introduced in June 2020.
Let's look at why the court approved Virgin's restructuring plan, and what companies intending to use the new plan need to know before moving forward.
How was the CIGB received?
Were there any concerns?
What has changed?
What else was proposed?
What's next?
A recap
After the Corporate Insolvency and Governance Bill (CIGB) was published on 20 May 2020, it raced through the House of Commons and House of Lords and, on 26 June 2020 (in under 6 weeks) came into force as the Corporate Insolvency and Governance Act 2020 (CIGA), with certain of the temporary measures taking effect from 1 March 2020.
How was the CIGB received?