With Hertz emerging from a bankruptcy with a positive result for shareholders, we are reminded of the interplay between the equity markets and the bankruptcy alternative.

Some firms facing financial challenges during the pandemic were able to avoid a bankruptcy filing altogether because of their ability to raise the necessary funds through an equity offering. Hertz provides an example of a situation where the bankruptcy filing instead of wiping out the equity enhanced value.

In the recent decision in Carlos Sevilleja Garcia v Marex Financial Limited,1 the Court of Appeal helpfully summarised the justifications for the English law rule against claims for reflective loss and confirmed that the rule applies equally to unsecured creditors of a company as it does to shareholders.

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