On 2 June 2020, Mr Justice Morgan handed down his judgment in the case of Re: A Company [2020] EWHC 1406 (Ch) in which a High Street retailer (whose identity is not disclosed) applied to restrain the presentation of a winding-up petition based on the provisions of the yet-to-be-enacted Corporate Insolvency and Governance Bill 2020 (the “Bill”).
The Government published its Corporate Insolvency and Governance Bill on 20 May 2020, which will implement the most significant reform to the UK’s insolvency framework in decades. In addition to permanent landmark changes, including introducing a business rescue moratorium and new restructuring plan, the Bill contains a number of temporary measures to help businesses respond to the COVID-19 crisis.
Key Takeaways |
It is almost 30 years since the commencement of the Companies (Amendment) Act 1990 (the “1990 Act”) which introduced the concept of Court protection for certain companies from their creditors to allow a formal restructure of a company’s debt. The examinership process is now governed by Part 10 of the Companies Act 2014 which mirrors the procedure provided for in the 1990 Act.
Examinership process
The High Court recently considered an application by creditors for directions calling upon a liquidator to reconsider advice he had provided in a report to the ODCE and to carry out further and more forensic investigation into the circumstances which led to the liquidation of the company.
Background
The oil and gas industry in the United States is highly dependent upon an intricate set of agreements that allow oil and gas to be gathered from privately owned land. Historically, the dedication language in oil and gas gathering agreements — through which the rights to the oil or gas in specified land are dedicated — was viewed as being a covenant that ran with the land. That view was put to the test during the wave of oil and gas exploration company bankruptcies that began in 2014.
When a company is unable to pay its debts as they fall due, a director’s duties shift from the management of the company for the benefit of the shareholders, to ensuring the company’s creditors are not disadvantaged by the company continuing to trade.
The directors should seek and comply with professional advice from their auditors and solicitors regarding any decision to continue trading for an interim period.
The Supreme Court has just delivered a judgment confirming the entitlement of a judgment debtor to appoint a receiver by way of equitable execution.
The comprehensive judgment is a useful history lesson in the development and expansion of the right to appoint a receiver by way of equitable execution which derives from the old Judicator (Ireland) Act, 1877.
Background
Judgment was obtained by a bank in February 2011 against two borrowers in the amount of €1,064,747.
On February 25, 2019, the United States Court of Appeals for the Second Circuit issued a decision holding that a trustee is not barred by either the presumption against extraterritoriality or by international comity principles from recovering property from a foreign subsequent transferee that received the property from a foreign initial transferee.
On January 17, 2019, the United States Court of Appeals for the Fifth Circuit issued a decision holding that “impairment” under a plan of reorganization does not arise even if a creditor is paid less than it would be entitled to under its contract, so long as the reduced recovery is due to the plan’s incorporation of the Bankruptcy Code’s disallowance provisions.