As expected, the UK's latest quarterly company insolvency statistics, published on 28 October, follow the pattern of previous quarterly updates this year with the number of insolvencies continuing to rise in comparison with both the equivalent quarter in 2021, and pre-pandemic.

With the temporary insolvency measures implemented under the Corporate Insolvency and Governance Act no longer in force, the Q3 2022 data shows a significant increase in insolvencies from Q3 2021, with the overall number of registered company insolvencies 40 per cent higher.

The High Court (Mr Justice Trower) today gave its judgment sanctioning Amigo’s ‘New Business Scheme’. A team of us at Freshfields were pleased to help Amigo with this. Here we outline the technical innovations that, despite significant legal and regulatory uncertainty, delivered the best available outcome for Amigo’s redress creditors and the prospect of Amigo lending again for the benefit of those creditors and future customers. We also identify two approaches that addressed the practical challenge of implementing a complex legal process with retail creditors.

For most businesses, the Chancellor’s budget statement yesterday brings some welcome news with the extension of certain critical Covid-19 support measures. However, this is coupled with the removal of certain government-backed loan schemes and a future increase in the corporation tax rate from 19 per cent to 25 per cent from 2023 onwards.

Courts and professionals have wrestled for years with the appropriate approach to use in setting the interest rate when a debtor imposes a chapter 11 plan on a secured creditor and pays the creditor the value of its collateral through deferred payments under section 1129(b)(2)(A)(i)(II) of the Bankruptcy Code. Secured lenders gained a major victory on October 20, 2017, when the Second Circuit Court of Appeals concluded that a market rate of interest is preferred to a so-called “formula approach” in chapter 11, when an efficient market exists.

Post-judgment interest is not something most lenders consider when making a loan. In fact, it is not ordinarily the subject of significant analysis even when litigation becomes necessary. Where the United States District Court is the preferred venue, however, parties easily can fall into the quandary of being stuck with the federal statutory post-judgment interest rate, which is currently less than 1% per annum.

In an appeal certified directly from the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to the Court of Appeals, the Third Circuit issued a ruling upholding Judge Kevin Gross’s decision that a chapter 11 debtor-employer may reject the continuing terms and conditions of a collective bargaining agreement (“CBA”) under 11 U.S.C. § 1113, despite that the CBA expired post-petition.

The Bankruptcy Court’s Decision

On January 17, 2014, Chief Judge Kevin Gross of the Bankruptcy Court for the District of Delaware issued a decision  limiting the right of a holder of a secured claim to credit bid at a bankruptcy sale. In re Fisker Auto. Holdings, Inc.,  Case No. 13-13087-KG, 2014 WL 210593 (Bankr. D. Del. Jan. 17, 2014). Fisker raises significant issues for lenders who  are interested in selling their secured debt and for parties who buy secured debt with the goal of using the debt to  acquire the borrower’s assets through a credit bid.

The absolute priority rule of Section 1129(b) of the Bankruptcy Code is a fundamental creditor protection in a Chapter 11 bankruptcy case. In general terms, the rule provides that if a class of unsecured creditors rejects a debtor’s reorganization plan and is not paid in full, junior creditors and equity interestholders may not receive or retain any property under the plan. The rule thus implements the general state-law principle that creditors are entitled to payment before shareholders, unless creditors agree to a different result.