On 5 October 2022, the Supreme Court handed down its decision in the case of BTI 2014 LLC v Sequana SA and others. This is the first time that the Supreme Court has addressed the questions of whether there is a duty owed to creditor where a company may be at risk of insolvency, and the point at which that duty is triggered.
Criminal prosecutions for administrators are rare, and rarer still are prosecutions under employment legislation. However, a recent decision has confirmed that an administrator can be prosecuted and personally liable for a failure to notify the Secretary of State of proposed collective redundancies under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
When used correctly, pre-pack administrations can be an effective means of creating an opportunity for the rescue of an insolvent business. However, concerns are regularly expressed about the lack of transparency in the sale process and the potential for poor outcomes for unsecured creditors, particularly where a disposal involves connected parties. These concerns have been exacerbated by some unfavourable media reports about a limited number of high-profile cases, and the speed at which transactions are often required to take place in order to preserve value and jobs.
The Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 will apply to all business insolvencies that commence on or after 1 December 2020. They provide for certain debts owed to HM Revenue & Customs (HMRC) to become preferential debts in the event of a business entering a formal insolvency. It is important that creditors understand whether they are affected by these changes so that they can decide whether they need to take steps to protect their position.
The relevant debts
Jasvir Jootla provides an overview of the recent changes to the Corporate Insolvency and Governance Act. She highlights the differences within the Act and discuss the impact it will have if you are dealing with insolvent businesses.
Transcript
The COVID-19 crisis is already showing signs of pushing the UK economy into recession, has undoubtedly impacted the M&A market in the UK and increased the likelihood of businesses entering into insolvency proceedings. However, history tells us that shocks to the market do give rise to opportunities it's a question of knowing where they are and being prepared.
The Government continues to develop its response to the COVID-19 pandemic. In this Insight we examine the weekend's announcement from the Business Secretary that provides some welcome good news for directors.
Healthcare workers are on the frontline of fighting COVID-19, but directors of companies have an equally important task, that of keeping the wheels turning and helping minimise the damage to the economy and the livelihoods of their employees, and keeping otherwise viable businesses intact for when the crisis passes.
How should directors respond to the fast-moving situation and the challenges posed by assessing and dealing with the impact on the business?
The High Court decision in Re All Star Leisure (Group) Limited (2019), which confirmed the validity of an administration appointment by a qualified floating charge holder (QFCH) out of court hours by CE-Filing, will be welcomed.
The decision accepted that the rules did not currently provide for such an out of hours appointment to take place but it confirmed it was a defect capable of being cured and, perhaps more importantly, the court also stressed the need for an urgent review of the rules so that there is no doubt such an appointment could be made.
破产重整，实践中也称之为司法重组、法庭内重组、破产保护，是在人民法院主导下进行的企业重组活动，是《企业破产法》规定的三种程序之一。与破产清算程序不同，破产重整程序旨在帮助限于困境的企业脱离困境、实现重生。自《企业破产法》于2007年6月1日实施以来，沪深两市已有49家上市公司实施了破产重整，其中47家已完成重整。此外，部分从沪深两家交易所退市的公司也实施了破产重整。从实践来看，破产重整的上市公司或者退市公司多数具有债务负担沉重、持续经营能力较弱、盈利能力较差的特点。从结果来看，破产重整程序确实起到了拯救困难企业的积极作用。长航凤凰（SZ，000520）、长航油运5（400061）是近年来通过破产重整程序实现企业脱困复兴的典型案例。