The Supreme Court of the United Kingdom (“SC”) has recently handed down a decision in the case of BTI v Sequana, dealing with the powers and duties of company directors. The appeal was expected to be of considerable importance.

This alert is especially relevant to companies, and directors of companies, in financial distress, as well as creditors and insolvency practitioners.

Key Takeaways

The Supreme Court has unanimously dismissed the appeal of the decision in BTI –v- Sequana.

At a time when many companies are facing financial difficulties and directors are considering their legal duties, this long-awaited judgment has confirmed that directors have a 'creditor interest duty' when a company is insolvent or bordering on insolvency or an insolvent liquidation or administration is probable.  

Background

The recent High Court decision in Re Nostrum Oil & Gas plc [2022] EWHC 2249 (Ch) considers a scheme of arrangement where creditors are the target of Russian sanctions. 

Background 

On July 7, 2022, the UK Insolvency Service, an executive agency of government responsible for a variety of roles in administering the UK insolvency regime, published a consultation on the UK’s proposed adoption of two UNCITRAL Model Laws on insolvency, inviting responses (the “Consultation”).

The recent High Court decision in Re Petropavlovsk Plc [2022] EWHC 2097 (Ch) considers the interaction of UK insolvency procedure and the sanctions regime imposed on Russia. 

Background 

Administrators were appointed to the English holding company of Russian gold mining group, Petropavlovsk Plc, in July 2022. The holding company was not sanctioned but sanctions had affected its ability to refinance and to pay its debts as they fell due.

On 15 August 2022, the UK High Court handed down judgment in Oceanfill Ltd v Nuffield Health Wellbeing Ltd and Cannons Group Ltd.

Background

The claim was for rent and other arrears by Oceanfill, the landlord of a gym in Leeds. It was brought against Nuffield, the original tenant and Cannons, the original guarantor under the lease.

Nuffield had assigned the lease to Virgin Active in 2000, guaranteeing the performance of Virgin Active as tenant and Cannons had given a guarantee of Nuffield's obligations.

Virgin Active restructuring plan 

On 1 August 2022, the English High Court granted the administrators of Petropavlovsk PLC (the “Company”) permission to enter into a sale of its Russian assets to Russian entity UMMC-Invest (the “Proposed Sale”) amidst sanctions concerns.

In Re Swiss Cottage [2022] EWHC 1495 (Ch), junior creditors argued that administrators appointed to two companies had exceeded their powers and breached their duties when selling two properties.

Background

For background on the Act and the National Security and Investment (NSI) regime, please see our November 2020 Client Alert, August 2021 Client Alert, and

Is the rule in Gibbs justifiable in the context of modern international insolvency laws or is England clinging to an outdated rule simply to keep restructurings here? The rule stems from an 1890 Court of Appeal Case, which holds that only English courts can validate the compromise or discharge of English law governed debt. The rule cuts across the trend of increased cross-border cooperation in insolvency matters – commonly described as the “modified universalist” approach and critics see the rule as a relic of a more Anglo-centric approach to insolvency law.