The Abu Dhabi Global Market (the “ADGM”) courts have recently handed down their decision in NMC Healthcare Limited & Others v Shetty & Others ([2024] ADGMCFI 0007). The decision deals with several important principles in relation to fraudulent/wrongful trading liabilities under ADGM law. Given the ADGM re-domiciliation (or continuation) regime, enabling companies incorporated elsewhere to be redomiciled to ADGM with relative ease, the decision is likely to be of interest beyond the borders of the ADGM.
In the recent decision Sian Participation v Halimeda (Sian), the Judicial Committee of the Privy Council (the Privy Council) held on a BVI appeal that a winding-up petition should not be stayed or dismissed merely because the underlying debt is subject to a generally-worded arbitration agreement.
In the most significant decision of the decade on a matter of U.S. bankruptcy law, the U.S. Supreme Court rendered its highly anticipated decision in Harrington v. Purdue Pharma L.P., 603 U.S. ____ (2024) on June 27, 2024, striking down the non-consensual third party releases that were the cornerstone of Purdue Pharma's Chapter 11 Plan of Reorganization by a vote of 5-4. In doing so, the Court said:
Following a series of important decisions in England and across Europe, it is now beyond doubt that court-based restructuring processes should be approached from the outset as pieces of litigation.
We have seen increasingly sophisticated challenges to restructurings, which the courts are willing to accommodate. In appropriate cases, the courts have also refused to sanction restructurings.
The English Court of Appeal has today overturned the restructuring plan sanction order made by the High Court in April 2023.
The keenly awaited judgment raises some difficult issues for Adler in the context of its restructuring, but more broadly clarifies a number of points in relation to restructuring plans.
How the court uses its discretion to sanction a plan
High rates of insolvencies look set to continue as the latest quarterly insolvency statistics have been published for England and Wales. Whilst the statistics show a 2% dip from the second quarter of 2023, the number of insolvencies remains 10% higher than in 2022 and shows a return to pre-pandemic levels for compulsory liquidations and administrations. It is particularly striking that the first two quarters of 2023 represent the highest quarterly insolvencies since Q2 2009.
The Parliamentary Joint Committee on Corporations and Financial Services (the Committee) has delivered its report following an inquiry into the “effectiveness of Australia’s corporate insolvency laws in protecting and maximising value for the benefit of all interested parties and the economy”.
On 16 May 2023, Mr Justice Adam Johnson in the High Court refused to sanction the restructuring plan proposed by The Great Annual Savings Company Limited (GAS) following objections from HMRC.
The UK’s latest quarterly insolvency statistics have been published and, as predicted, continue to show a high rate of insolvencies, both in relation to pre-pandemic numbers and by comparison to last year’s Q1 results. The Q1 2023 statistics show a 18% increase in the overall number of registered company insolvencies from Q1 2022 and a 4% decrease from Q4 2022, with a total of 5,747 company insolvencies (seasonally adjusted) during this past quarter.
In the much-anticipated decision of Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2 (Badenoch (HCA)), the High Court of Australia (the HCA) has now confirmed that the peak indebtedness rule may not be used when assessing the quantum of an unfair preference claim arising from a continuing business relationship.