Licensors of intellectual property rights may soon be unable to terminate licences where the licensee has gone into an insolvency process.

What are ipso facto clauses and why do they matter?

Permanent measures
Temporary measures

The much anticipated Corporate Insolvency and Governance Bill (the Bill) was published on 20 May 2020.

The much anticipated Corporate Insolvency and Governance Bill (the Bill) was published on 20 May 2020.

The proposed legislation is split into two broad categories: temporary provisions brought about as a result of COVID-19 and permanent provisions which will result in fundamental changes to UK insolvency law. The proposals, both temporary and permanent, reflect a shift towards a more debtor-friendly regime.

Building on measures already introduced in the Coronavirus Act – such as the moratorium on lease termination for non-payment of rent until 30 June 2020 – the Government announced that further emergency measures will be introduced.

Statutory demands and winding up petitions issued to commercial tenants to be temporarily voided

The forthcoming Corporate Insolvency and Governance Bill will include restrictions on the use of statutory demands and winding up petitions to recover sums owed by tenants.

HEADLINES

• Default levels remain historically low at 1 per cent to 2 per cent
• Prevalence of cov-lite loans in Europe may be concealing some underperformance, but there are no conventional triggers for lenders to act

Despite concerns that the economic cycle is peaking, and the impact of geopolitical and trade volatility on corporate earnings, leveraged finance default rates show little sign of rising during the next 12 months.

On 12 June 2019, after a tense meeting with landlords and creditors, the company voluntary arrangements (CVAs) proposed by the Arcadia Group Ltd (Arcadia) were approved by the requisite majority of creditors, allowing the group to restructure its balance sheet and stave off, at least for the time being, a liquidation or administration proceeding.

Arcadia's decline

As more Turkish companies begin to report liquidity issues and economic pressures begin to bite, successful financial restructurings are likely to become increasingly critical to the prosperity of the Turkish economy

Only time will tell whether local processes will provide a suitable toolkit for large-scale corporate restructurings, or whether other international restructurings processes may also have a role to play.

All three institutions of the European Union have now approved the EU Preventive Restructuring Framework Directive. This is the EU's first attempt to "harmonise" insolvency laws across the Member States, that have disparate existing legislation. What does the Directive do and what will be its effect in practice?

The Directive

Sports Direct International plc's last-minute offer to buy substantially all of the assets of House of Fraser out of administration is the latest example of a pre-packaged administration being used to rescue a failing business and continue it as a going concern.

The House of Fraser pre-pack sale to Sports Direct, the British retail group headed by Mike Ashley, was announced almost immediately after House of Fraser entered into administration, and included a transfer of its UK stores, the brand and all of its stock and employees.

The UK and the US have historically been perceived as leading jurisdictions in the development of restructuring and insolvency law – to the extent that dozens of local insolvency regimes around the world have been modelled on some combination of their processes. Both regimes are highly sophisticated, and feature well-developed legislation supported by decades of case law that offers both debtors and creditors alike a degree of certainty and predictability that is not always available in other jurisdictions.