Summary
Cryptocurrency is a hot topic in the legal industry and one with which the legal world is really just starting to grapple. This is ever more prevalent with a number of recent high-profile crypto insolvencies including Three Arrows Capital, Celsius Network and FTX.
This article first appeared in Accountancy Daily on 20 January 2023.
With supply chain problems, war in Europe and other issues leading to higher inflation and an increasingly uncertain economic outlook, this article explores the options available to companies experiencing financial distress.
As the chill of recession bites for homes and businesses alike, SMEs are faced with the daunting prospect of navigating their way through the bleak mid-winter. In October 2022, inflation reached 11.1% and company insolvencies were 38% higher than the same period last year. Creditors’ voluntary liquidations in the same period were 53% higher than in 2019 (i.e. pre-pandemic), continuing the theme of businesses being forced to consider this terminal insolvency process, as following the pandemic they have struggled to adapt to the challenging market conditions.
Oceanfill Ltd v Nuffield Health Wellbeing Ltd and Cannons Group Ltd. [2022] EWHC 2178 (Ch)
A recent decision of the High Court has given helpful clarity on the effects of the UK's restructuring plan procedure on lease agreements and the implications for lease guarantors.
The Virgin Active plan
The government’s monthly insolvency statistics for August 2022 present a concerning trend for companies hoping to weather the storm amid the current economic crisis. Largely driven by creditors’ voluntary liquidations, company insolvencies were 43% higher than the same period last year and 42% higher than in 2019 (pre-pandemic).
Background
Houst Ltd (“the Company”) is a property management company which specialises in short-term holiday rentals through an online platform. It is an SME (small or medium-sized enterprise) with total liabilities of approximately £10 million at stake. The Company became both cashflow and balance sheet insolvent having experienced financial difficulty during the Covid pandemic and this resulted in creditors having threatened winding-up petitions.
Summary
The Hong Kong Court and the US Bankruptcy Court have made conflicting comments regarding the discharge of New York law-governed debt by a foreign scheme of arrangement, where that scheme is the subject of recognition under Chapter 15 of the US Bankruptcy Code.
With administration figures creeping back up after falling to low levels during the pandemic, the number of pre-pack sales of businesses in administration also appears to be on the increase. In such transactions, a purchaser acquires all, or substantially all, of the business and assets of the insolvent company from the administrator, with the terms of the deal being agreed pre-appointment and completion usually taking place immediately after the administrator takes office.