The persisting spectre of the pandemic continues to create uncertainty in the market. Over the last 18 months, insolvency figures remained consistently low due to the government support which has been in place. With the prospect of that support coming to an end there is likely to be a reckoning, but when that will begin is unclear. Overall, this next year is likely to be one of resolving loose ends and tidying up before the economy can take off afresh.
Market outlook
There were big changes in 2020 in the world of restructuring and insolvency legislation with the introduction of two new restructuring tools: the Moratorium and the Restructuring Plan, as well as the reintroduction of Crown preference.
The Judge in the Sunbird scheme of arrangement sanction hearing has declined to sanction the scheme due to the “paucity of information” provided by the company to the creditors ahead of the creditor vote.
The Judge criticised the company’s general approach to the way in which it engaged with creditors, particularly those whom the directors felt would be obstructive to the scheme’s progress. In general terms, the Judge commented on the practice of lock-up agreements and highlighted concerns with the payment of lock-up fees.
It seems that business disruption due to coronavirus is pretty inevitable. What should you as a company director be doing if the disruption means your business starts to suffer?
What changes for me as a director?
As a director, you know that you owe duties to the company. When the business starts heading towards insolvency, there is a change of emphasis and instead of doing what is best for the shareholders, you have to change and consider what the consequences of your actions will be for the company’s creditors.
With two decisions (No. 1895/2018 and No. 1896/2018), both filed on 25 January 2018, the Court of Cassation reached opposite conclusions in the two different situations
The case
The Constitutional Court (6 December 2017) confirmed that Art. 147, para. 5, of the Italian Bankruptcy Law does not violate the Constitution as long as it is interpreted in a broad sense
The case
With the decision No. 1195 of 18 January 2018, the Court of Cassation ruled on the powers of the extraordinary commissioner to require performance of pending contracts and on the treatment of the relevant claims of the suppliers
The case
The Court of Cassation with a decision of 25 September 2017, No. 22274 confirms that Art. 74 of the Italian Bankruptcy Law provides a special rule, which does not apply to cases to which it is not explicitly extended
The case
With the decision No. 1649 of 19 September 2017 the Court of Appeals of Catania followed the interpretation according to which a spin-off is not subject to the avoiding powers of a bankruptcy receiver
The case