The characterisation of a charge as fixed or floating can have significant ramifications for the chargee on chargor’s insolvency. This is because the holder of a fixed charge enjoys significant advantage, in terms of the order of priority of distributions to creditors, over a floating charge holder.
The English Court has refused to sanction two separate restructuring plans proposed by Nasmyth Group Limited (Nasmyth) and The Great Annual Savings Company Ltd (GAS). Both companies sought to use Part 26A of the Companies Act 2006 to “cram down” His Majesty’s Revenue and Customs (HMRC). Whilst neither decision is the first time that Part 26A has been used in this way1, they are the first to involve any active participation by HMRC in the sanction hearing2.
Recently, the Supreme Court of the United Kingdom released its judgment in BTI 2014 LLC v Sequana SA1. This marks the first occasion on which the nature, scope and content of directors' duties to creditors when a company is nearing insolvency (the "Creditor Duty") has been considered by the Supreme Court.
Last week, the Supreme Court of the United Kingdom released its judgment in BTI 2014 LLC v Sequana SA. This marks the first occasion on which the nature, scope and content of directors' duties to creditors when a company is nearing insolvency (the "Creditor Duty") has been considered by the Supreme Court.
While the timing of competing English and German insolvency applications in Re Galapagos allowed for clear determination of jurisdiction under the UK Insolvency Regulation, there remains potential uncertainty as to how similar competing applications made following 31 December 2020 will be resolved in the post-Brexit environment.
Background
The UK Government has announced changes to the regime for winding-up petitions. With effect from 1 October 2021, some of the protections currently afforded to businesses against aggressive debt recovery action are being phased out.
The changes are intended to avoid a 'cliff edge' for debtor companies when the current measures lapse at the end of September 2021, and have a tapering effect to avoid the flood of winding-up petitions that might otherwise be expected.
What are the current restrictions (in place until 30 September 2021)?
So far this year, fewer European and American businesses have encountered financial distress that required either bankruptcy or restructuring procedures than in the same period in 2020. This decline occurred despite the ongoing economic impact of COVID-19.
A week is often described as a long time in politics, and so also (it seems) with the restructuring market.
Last week, we saw significant strides forward with:
Pre-packaged administration sales (where a sale of key assets is agreed prior to the appointment of administrators and then implemented by the administrators immediately following their appointment), have been a widely-used and highly successful tool to rescue businesses, or parts of businesses, that may otherwise have languished in administration interminably.
The UK Restructuring Plan took its first foray down the well-trodden path of lease restructuring over the last week. The Restructuring Plan has been used through to court sanction in five cases so far: however, none has sought to compromise landlord claims, the preferred tool for which has until now been the CVA.