Unfortunately your business can be confronted with bankruptcy of one of your (Dutch) business partners. In most cases this will damage your business. We can help you to avoid or limit damages. In this edition of TW FOUR we will set out FOUR ways to protect your business from the bankruptcy of one of your (Dutch) business partners.
The case concerned royalty payments, which a creditor had a contractual right to receive, arising from iron ore produced at a mine in Sierra Leone.
Background
The case concerned royalty payments, which a creditor had a contractual right to receive, arising from iron ore produced at a mine in Sierra Leone.
The parent company of the Sierra Leonean mining company went into administration and administrators from PwC were appointed. The creditor's director called the administrators to stress the importance of bringing the royalty payments to the attention of a third party purchaser.
The administrators subsequently sold the mine, but did not make the purchaser aware of the royalty issue.
European Insolvency Regulation
Daycare company Estro was declared bankrupt in July 2014, but the undertaking was relaunched immediately, as the relaunch was prepared in a ‘pre-pack’ insolvency. All 3600 employees of the bankrupt company were dismissed by the administrator. About 2600 employees were immediately employed again by the relaunched company, which company was a so called ‘connected party’ as the shareholder also held a substantial part of the shares of Estro.
On 22 April 2015, the Supreme Court handed down its decision in Jetivia SA v Bilta (UK) Limited, unanimously holding that where a company has been the victim of wrong-doing by its directors, that wrong-doing should not be attributed to the company so as to afford the directors an illegality defence.
The result is clear and not a surprising one. The judgments are less clear however. The Court highlighted the difficulties in developing illegality principles of general application for future cases, but then decided now was not the time to try.
The Dutch shrimp factory Heiploeg was declared bankrupt in November 2014. The undertaking was relaunched immediately, as the relaunch was prepared in a ‘pre-pack’ construction. All 180 employees of the bankrupt company were dismissed by the administrator. 120 employees were immediately employed again by the relaunched company, but on different employment conditions.
Illegality, attribution of knowledge, and Stone & Rolls: Jetivia SA v Bilta (UK) Limited
On 22 April 2015, the Supreme Court handed down its decision in Jetivia SA v Bilta (UK) Limited1, unanimously holding that where a company has been the victim of wrong-doing by its directors, that wrong-doing should not be attributed to the company so as to afford the directors an illegality defence.