This week’s TGIF looks at a recent decision of the Victorian Supreme Court, where a winding up application was adjourned to allow the debtor company to pursue restructuring under the recently introduced small business restructuring reforms.

Key takeaways

This week’s TGIF considers the decision of the Supreme Court of New South Wales In the matter of Gearhouse BSI Pty Ltd [2021] NSWSC 98. In this case, one of the joint venture parties obtained an order to wind up the joint venture on the basis that the underlying purpose of the business had failed.

Key takeaways

This week’s TGIF considers an application to wind up a company on just and equitable grounds. The Court declined to make the order, finding the suggested deadlock had an air of artificiality and the application was infused with self-interest.

Key takeaways

This week’s TGIF considers the decision in Nikitins v EncoreFX (Australia) Pty Ltd (No 2) [2021] FCA 27, where the Federal Court found that funds paid into a holding account for the provision of foreign exchange services were held on trust and were not property of the liquidation.

Key takeaways

I had an interesting conversation this week with the Evening Standard, considering the prospect of further company voluntary arrangements, or 'CVAs' on the UK high street as the year progresses.

The vast majority of ‘bricks and mortar’ retailers, as well as hospitality venues, are desperately seeking ways to cut their fixed costs to improve their chances of riding-out the pandemic. Leasehold obligations are often among the most significant of those fixed costs, and the CVA offers a well-tested route to compromise those obligations.

This week’s TGIF considers a recent decision of the NSW Supreme Court which determined an application to extend the time to bring voidable transaction claims, where the potential defendants were themselves insolvent, deregistered or bankrupt and the prospect of returns from the proceedings unclear.

Key takeaways

The UK Government has today announced plans to introduce new legislation which will require mandatory independent scrutiny of 'pre-pack' administration sales, where connected parties, such as the insolvent company's existing directors or shareholders, are involved in the transaction.

Although the Sunbird scheme of arrangement was approved by the relevant creditors, sanction was refused by Mr. Justice Snowdon, who highlighted:

• a ‘paucity of information provided by the company as part of the scheme process’, and
• a failure to engage with creditors ‘whom the directors clearly felt were irrelevant or would be an obstacle to their plans’.

He remarked that the company’s approach 'fell a considerable distance short of what was required for a fair process'.

Despite commentators’ recent focus on the new Part 26A restructuring plan, introduced in late June by the Corporate Insolvency and Governance Act 2020, the scheme of arrangement under Part 26 of the Companies Act 2006 (“scheme”) remains a popular tool for companies to reach a compromise or arrangement with their creditors and/or its members.

New Look's unsecured creditors today approved a company voluntary arrangement that will amend 402 store leases to a turnover rent model, reflecting recent movements in the market towards more flexible lease obligations.

Despite opposition from many landlords, and considerable disquiet in the property industry, it is clear that tenants remain open to using the CVA process to restructure their leases, as a means to address the impact of the COVID-19 pandemic.