Key Takeaways

Key Takeaways

Key Takeaways

On 2 June 2020, Mr Justice Morgan handed down his judgment in the case of Re: A Company [2020] EWHC 1406 (Ch) in which a High Street retailer (whose identity is not disclosed) applied to restrain the presentation of a winding-up petition based on the provisions of the yet-to-be-enacted Corporate Insolvency and Governance Bill 2020 (the “Bill”).

The Government published its Corporate Insolvency and Governance Bill on 20 May 2020, which will implement the most significant reform to the UK’s insolvency framework in decades. In addition to permanent landmark changes, including introducing a business rescue moratorium and new restructuring plan, the Bill contains a number of temporary measures to help businesses respond to the COVID-19 crisis.

Legislative changes in Singapore and the EU introduce pre-insolvency processes facilitating non-consensual debt restructurings or cram downs comparable to those already available in London and New York. In particular, the EU Recast Insolvency Regulation (the "Recast Regulation") came into effect on June 26, 2017, enhancing cross-border co-operation for applicable insolvency proceedings starting in the EU after that date.*

The existing insolvency rules in the UK have been recast with the aim to "modernize and consolidate" the procedural framework for insolvency processes in the UK and promote efficiency. The Insolvency (England and Wales) Rules 2016 (the “New Rules”) came into force on April 6, 2017.

A key feature of the New Rules is a welcome overhaul of the provisions regarding communication with creditors, to allow for electronic communications instead of paper documents and physical meetings.

There is no equivalent to the English law concept of trust under French law.  This means that where a syndicated loan is to be secured by French obligors, security interests must generally be granted independently to each member of the syndicate (there will be a list of pledgees contained in the security document).  Any change to that group of lenders would generally entail the transfer of the French law security to each new lender.

The proposal for a regulation of the European Parliament and of the Council (SWD(2012) 416 and SWD(2012) 417) amending Council Regulation (EC) n°1346/2000 on insolvency proceedings aims to extend its scope of application by revising the definition of insolvency proceedings to include the proceedings in which the debtor retains some control albeit subject to the control / supervision by a court / a judicial administrator, including preinsolvency proceedings.

Following a broad consultation, the European Commission presented, on 13 December 2012, its proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) n°1346/2000 on insolvency proceedings. Ten years after the Regulation's entry into force, the Commission has deemed it necessary to amend it in order to solve difficulties related to its practical implementation.