This entry is part of Nelson Mullins’s ongoing “Bankruptcy Basics” blog series that is intended to address foundational aspects of bankruptcy for non-bankruptcy practitioners and professionals. This entry will explain the concepts of the bankruptcy “estate” and “property of the estate” and the importance thereof.

Following the 54% increase in the energy price cap announced by Ofgem on 3 February, and with many predicting that a second substantial increase may be required this October to keep pace with wholesale prices, what is next for beleaguered small energy suppliers?

This blog entry will be the first in a new, ongoing series of entries in the “Bankruptcy Protector” that will attempt to familiarize new attorneys and non-bankruptcy practitioners with the basic concepts of bankruptcy law of which all lawyers should be aware.

In what is believed to be the first reported decision on this issue, the High Court has allowed an appeal under section 205(4) of the Insolvency Act 1986 (IA 1986) against a decision of the Secretary of State to defer the dissolution of a company in liquidation.

A link to the judgement can be found here.

The facts

The Commercial Rent (Coronavirus) Bill 2021 (the Bill) is expected to come into force from 25 March 2022 – it is intended to introduce an arbitration procedure for commercial rent arrears accrued by businesses during the “protected period” and also to extend the restrictions on the use of winding up proceedings and now to include personal bankruptcy.

The “protected period” relates to business tenancies adversely affected by the pandemic either by enforced closure or restrictions placed on trade. This period – as set out in section 5 of the Bill – runs from:

In the first three months of 2021, almost 40,000 companies were struck off the Companies House register – an increase of 743% on the same period in 2020. Speculation that these figures related to avoidance of coronavirus-related loan repayments led the Department for Business, Energy and Industrial Strategy to take the highly unusual step, in March 2021, of making a blanket objection to any application for dissolution by a company with an unpaid bounce-back loan.

As the UK emerges from the COVID-19 pandemic, the domestic construction industry can look forward to a bright but challenging future. Mortgages are at record lows; housing demand remains high and the wider economy is in optimistic mood. However, businesses are experiencing challenges associated with sourcing raw materials, staff shortages and the prospect that more companies will likely fail as government business support measures tail off.

A bill currently making its way through parliament is intended to enable increased scrutiny of the actions of directors of dissolved companies – and discourage the abuse of the voluntary strike-off procedure as an ‘alternative’ to insolvency proceedings. The measures relating to dissolved companies in the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill (the “Bill”) have been contemplated for some time, originally raised in the government’s consultation on insolvency and corporate governance in 2018 (the “2018 Consultation”).

The Bankruptcy Protector

In the ever-churning waters of the Countryman test for determining whether a contract is executory, the United States District Court for the Middle District of Louisiana recently dipped its toe. The question before the court was whether surety bonds issued to an oil and gas company were executory. The district court, upholding the bankruptcy court below, held that they were not. An analysis of this opinion sheds light on why the surety bonds are not executory and provides lessons for both creditors and debtors, alike.

Insolvency proceedings are typically launched by an administrator or liquidator during an insolvency process. The nature of modern insolvency litigation, including the market for assigning causes of action to third parties, has somewhat muddied the waters on how and where to commence proceedings. Two recent cases provide some valuable insight into the High Court’s approach.