In the second of our mini-series on insolvency in construction, we consider what you need to do when you find out that the party you are in contract with has become (or is about to become) insolvent.

Who are you in contract with? Which specific entity?

The first thing you should do in the event of a counterparty's alleged insolvency is check which legal entity you are in a contract with.

This is in order to prevent you from acting too early and committing a repudiatory breach yourself, if you take pre-emptive action against your counterparty.

The German Federal Court of Justice (Bundesgerichtshof) has taken the opportunity to clarify its position on section 17(2) German Insolvency Act (Insolvenzordnung, InsO).  According to sec. 17(2) a debtor is deemed insolvent if he is unable to pay his debts as they fall due (Zahlungsunfähigkeit).

There is more trouble for the British High Street as Toys R Us and Maplins have both entered Administration. Toys R Us' remaining stores are due to close once stock is sold as the Administrators have been unable to find a buyer. Maplins' stores remain open for now and the Administrators are still looking to secure a buyer, but so far have been unsuccessful. New Look has announced it will be closing 60 stores, and Carpetright has announced plans to close poorly performing stores.

The Knesset has aimed to update the law on insolvency by passing the Law of Insolvency and Economic Rehabilitation.

This has arisen as a result of the current insolvency laws being considered to be regulated under outdated legislation, being disorganised and having had a detrimental effect on debtors, creditors, and the economy. The incoming Law will take effect in 18 months' time and is designed to rectify the situation and provide the Israeli economy with modern legislation with respect to insolvency.

The Law has three primary objectives:

Insolvency is high on the agenda in the construction industry.

In the first of this mini series, we take a look at the meaning of insolvency and summarise the main insolvency processes that can typically affect parties involved in construction projects. The series will also address contract issues and minimising risk, so keep an eye out for our future articles on this topic.

Following the collapse of Monarch and Air Berlin last year, the International Air Transport Association ("IATA") has suggested that bankruptcy laws should be reviewed globally in order to allow a “reasonable timeframe” for airlines to continue operating after entering insolvency to allow more passengers to complete their journeys.

The Swiss government presented a draft bill in May 2017 which was approved by the Swiss Council of States in December 2017 with very few amendments. The revised law could be effective as from 1 January 2019 if the Swiss National Council approves the revision this year.

Key changes include:

Brexit plays a part in an application by the Joint Administrators of Nortel Networks UK Limited and others to extend the Administrators' terms of office as uncertainty lies over what, if any recognition will be given to the Administrators by the courts of the EU Member States after 29 March 2019.

The Grand Court of the Cayman Islands granted common law recognition and assistance to the foreign Liquidators of a Cayman Islands company post Rubin v Eurofinance and Singularis Holdings Limited v PwC.

In Re China Agrotech Holdings Limited Ltd (FSD 157 of 2017 (NSJ)), the Grand Court of the Cayman Islands ("Cayman Court") granted Liquidators appointed by the High Court of Hong Kong leave to present and consent to a scheme of arrangement on behalf of China Agrotech Limited (the "Company") based on a common law discretion.

In Endersby and Coote v Astrosoccer 4 U Ltd the High Court made a retrospective Administration order over a company that was subject to a winding-up petition to "cure" an invalid directors' out-of-court appointment of Administrators.