The High Court sanctioned Madagascar Oil Limited’s restructuring plan, exercising cross class cram down. The judgment deals with a few now familiar points: what is the relevant alternative? Can it be a different deal? As well as touching on a few novel ones in an unusual two class only plan: was there in fact an in the money class enabling cross class cram down? Almost a third of the judgment is devoted to international recognition and effectiveness of the plan in Madagascar and Mauritius, an unusually detailed analysis, but required here given the specific facts of the case.

Disagreement regarding the interpretation of section 365(c) of the Bankruptcy Code has led to divergent rulings among the bankruptcy and federal circuit courts regarding whether a bankruptcy trustee or chapter 11 debtor can assume an executory contract or unexpired lease that is unassignable under applicable non-bankruptcy law without the counterparty's consent—even where the debtor has no intention of assigning the agreement to a third party.

In March 2015 the major high street retailer British Home Stores (BHS) was acquired for £1 by Retail Acquisitions Limited (RAL), a company owned by Mr Dominic Chappell. Mr Chappell became a director of the BHS entities upon completion of the purchase, together with three other individuals.

In Mitchell and others v Al Jaber; Al Jaber and others v JJW Ltd [2024] EWCA Civ 423 the Court of Appeal has confirmed that a director remained subject to a continuing fiduciary duty post liquidation when purporting to transfer assets owned by that company, on the basis he was an “intermeddler”. While the case concerned a BVI company, the court’s decision was based on English-law authorities and therefore has wider significance.

Facts

On 17 April 2024 the UK Jurisdiction Taskforce (theUKJT), chaired by Sir Geoffrey Vos published its Legal Statement on Digital Assets and English Insolvency Law.

In the recent case of Loveridge v Povey and Ors [2024] EWHC 329 (Ch) a company shareholder sought to challenge the administrators’ decision to rescue a balance sheet solvent company as a going concern by securing additional funding, as opposed to pursuing a sale of the business.

Background

The Bankruptcy Code provides that, in chapter 11 cases where the court does not find "cause" for the appointment of a trustee, the court "shall" appoint an examiner, upon a request from the Office of the U.S. Trustee (the "UST") or any party-in-interest prior to confirmation of a chapter 11 plan. The examiner's role is to investigate the debtor's affairs or allegations of management misconduct, if either: (i) the court determines that the appointment would be in the best interests of stakeholders and the estate; or (ii) the debtor has qualifying unsecured debt exceeding $5 million.

McDermott restructuring plan approved amidst parallel settlement negotiations

The English court has given the green light to the restructuring plan (the Plan) proposed by CB&I UK Limited, part of the McDermott Group, marking the first such approval since the Court of Appeal’s pivotal decision in the Adler case (see our previous update).

The Court of Appeal has handed down judgment in the case of Humphrey v Bennett, providing some useful guidance on the nature and scope of a director’s duty to avoid conflicts of interest. The case was an appeal against summary judgment of the High Court following a derivative claim brought on behalf of a company by minority shareholders. The case will be of particular interest to directors of smaller companies whose management structures very often operate on a more informal footing.

2023 marked the highest annual number of corporate insolvencies since 1993, according to figures released by The Insolvency Service this week. While creditors’ voluntary liquidations remained by far the most commonly used process, 2023 saw increases across all processes tracked by the Insolvency Service.