On 18 March 2021, the UK Government published its white paper on restoring trust in audit and corporate governance. On 31 May 2022, the Government published its response to the consultation.
Background
German insolvency law prohibits managing directors from making payments on behalf of the company after it has become illiquid or over-indebted. This does not apply to payments made when acting with the due care and diligence of a prudent business manager. Such payments are privileged as they do not reduce the insolvency estate and do not disadvantage creditors if they allow the business to continue and enable corporate recovery.
Decision
On 30 March 2022, the English court sanctioned the most recent restructuring plan proposed by Smile Telecoms Holdings Limited (Smile).
Pandemic related restrictions on winding up companies come to an end.
Background
When the validity of an agreed interest rate is the subject of a dispute between the parties to a loan agreement in Germany, the insolvency courts do not have jurisdiction to deal with the dispute. This is something only the civil courts can do.
Impact
If lenders provide sufficient evidence of the loan interest amount, ie usually the loan agreement, the debtor is required to prove that the interest rate contradicts public policy or is unreasonably high.
On 25 January 2022, the Financial Conduct Authority (FCA) published draft guidance on how it will approach ‘compromises’ by regulated firms. The guidance is expressed to cover restructuring plans, schemes of arrangement and CVAs.
In our last blogpost (here) we reported how the court had, for the first time, exercised its power under s. 901C(4) Companies Act 2006 to exclude a company’s members and all but one class of its creditors from voting on a restructuring plan under Part 26A. The facts of this case are set out in more detail in that blogpost.
Summary
For the first time, the court has exercised its power under s. 901C(4) Companies Act 2006 to exclude a company’s members and all but one class of its creditors from voting on a restructuring plan under Part 26A. The court was satisfied that only one class of creditors had a genuine economic interest in the company and noted that “this was not a marginal case”.
Key drivers for the court’s decision (see more detail below) were:
The National Security and Investment Act 2021 (the Act) comes into force on 4 January 2022. The Act sets out the UK’s new national security screening regime. The Act replaces, and significantly extends, the UK government’s power to investigate and intervene in transactions which pose, or could pose, threats to the UK’s national security (see our earlier related blog post).
A new Act, which received Royal Assent on 15 December 2021, extends the existing directors’ disqualification regime to the directors of dissolved companies.