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?
The UK High Court has considered and granted permission for a so called “credit bid” in an application by the Special Administrators of Sova Capital Ltd (in special administration) for a substantial portfolio of illiquid Russian securities. The transaction structure, involving the transfer of securities in exchange for the release of a £233m claim against the estate, is unprecedented in the UK where ‘credit bidding’ has no technical recognition.
Are you witnessing an increasing trend towards any particular types of dispute?
Company directors who act in breach of their statutory and fiduciary duties can face disqualification for up to 15 years pursuant to the Company Directors Disqualification Act 1986 (CDDA). Prior to 15 February 2022, civil disqualification proceedings on the grounds of unfitness could only be brought in relation to directors of 'live' companies under s.8 CDDA (where the court retains a discretion whether or not to disqualify) or those subject to insolvency proceedings under s.6 CDDA (where the court is obliged to exercise its power to disqualify).
Introduction
The Companies (Guernsey) Law, 2008 (“Companies Law”) provides for companies, protected cell companies (“PCCs”), incorporated cell companies (“ICCs”) and cells of PCCs and ICCs to be placed into administration and for an administrator to be appointed to manage that entity's affairs whilst the administration order remains in force.
The Pension Schemes Bill [HL] 2019-20 (Bill) was re-introduced before Parliament on 7 January 2020. Among its proposed amendments to the Pensions Act 2004 (Act) are new criminal offences for failing to comply with a contribution notice, avoiding employer debt, conduct risking accrued scheme benefits, an expansion of the moral hazard powers and an extension of the ‘notifiable events’ framework. The Government’s stated intention is to “ensure that those who put pension schemes in jeopardy feel the full force of the law“.
On 19 September 2019, Norris J handed downjudgment in the challenge brought by six landlords against the Debenhams Retail Limited (Debenhams) company voluntary arrangement (CVA) which was approved by 94.71% of Debenham’s unsecured creditors on 9 May 2019.
In September 2012, Grant Thornton were appointed by the Royal Court of Guernsey as joint administrators of a Guernsey company called Montenegro investments limited (MIL) - a Guernsey property Investment Fund.. The joint administrators then appointed Ogier.
Current Status of MIL
This client briefing provides a general overview of schemes of arrangement for Guernsey companies under the Companies (Guernsey) Law, 2008 (the Companies Law). A scheme of arrangement can involve almost any kind of corporate reorganisation, merger, acquisition or restructuring so long as the appropriate approvals and court sanction are obtained. In the context of restructurings, there is limited precedent in Guernsey, although such schemes of arrangement can be used to assist in insolvent/quasi-insolvent restructurings.