When a company is in financial distress, its directors will face difficult choices. Should they trade on to trade out of the company's financial difficulties or should they file for insolvency? If they delay filing and the company goes into administration or liquidation, will the directors be at risk from a wrongful trading claim by the subsequently appointed liquidator? Once in liquidation, will they be held to have separately breached their duties as directors and face a misfeasance claim? If they file precipitously, will creditors complain they did not do enough to save the business?
On 23 January 2024, the English Court of Appeal set aside the April 2023 order of the High Court sanctioning the English Part 26A restructuring plan (the “Plan”) proposed by AGPS BondCo plc (the “Plan Company”), a subsidiary of Adler Group SA (Adler Group SA and its subsidiaries being the "Adler Group"). The successful appeal was brought by an ad hoc group of holders of the Adler Group's 2029 notes (the "AHG"). The practical consequences of this decision for the Adler Group's restructuring remain to be seen.
The administrators of Avanti Communications Limited (the “Company”) sought directions from the High Court as to whether purported fixed charges in favour of the secured lenders to the satellite operating business should be recharacterised as floating charges (In the matter of Avanti Communications Limited (In administration) [2023] EWHC 940 (Ch)).
Summary of decision
Battered by the COVID-19 pandemic and the decline in passengers travelling to Hong Kong, Hong Kong Airlines (HKA) has become the latest carrier to undergo a debt restructuring. Its restructuring plan was sanctioned by the English court on 9 December 2022 and its scheme of arrangement was sanctioned by the Hong Kong court on 14 December 2022.
In summary:
Although the IMF recently announced at Davos that it would upgrade its global economic forecasts, with an improvement predicted in the later part of 2023 and into 2024, times remain difficult for many companies and their lenders – and are likely to remain so for a while yet.
What is the so-called "creditor duty"?
This is the duty, introduced into English common law by the leading case of West Mercia Safetywear v Dodd1 in 1988, of company directors to consider, or act in accordance with, the interests of the company's creditors when the company becomes insolvent, or when it approaches, or is at real risk of insolvency.
Background
The Insolvency Service recently published a consultation with respect to the proposed implementation of the United Nations Commission on International Trade Law ("UNCITRAL") Model Law on Recognition and Enforcement of Insolvency-Related Judgments, which concerns cross-border recognition of judgments associated with insolvency proceedings, an
On 22 July 2022, the English High Court sanctioned Houst Limited’s (“Houst” or the “Company”) restructuring plan (the “Restructuring Plan”), which significantly, is the first time a Restructuring Plan has been used to cram down HM Revenue & Customs (“HMRC”) as preferential creditor.1
Background
In its recent consultation (“Managing the failure of systematic Digital Settlement Asset (including stablecoin) firms”), the Government has proposed that one of two special administration regimes (SARs) which currently apply to certain financial institutions (the Financial Market Infrastructure Special Administration Regime (FMI SAR) or the Payment and E-Money Special Administ
The active trading of loans made to a borrower that has become unable to repay in full (known as non-performing loans or distressed debt) has been a feature of the North American and European loan markets for a number of years.