In a recent ruling (NMC Health PLC (in Administration) v Ernst & Young LLP [2024] EWHC 2905 (Comm)), the High Court declined to order disclosure of witness statements and transcripts of interviews conducted by administrators during their initial investigations, citing litigation privilege.

Litigation privilege

On December 31, 2024, the United States Court of Appeals for the Fifth Circuit issued its long awaited opinion in the disputes arising from the controversial “uptier” transaction executed by Serta Simmons Bedding, L.L.C. (“Serta”) in 2020 and the confirmation of Serta’s chapter 11 plan by the Southern District of Texas Bankruptcy Court in 2023. The Fifth Circuit reversed former Bankruptcy Judge David Jones’ summary judgment ruling that the 2020 uptier transaction was permissible under Serta’s existing credit agreements.

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.

What happens to a company at the end of an administration is a question that probably only keeps insolvency anoraks up at night.

There are a limited number of potential options, with the rescue of the company as a going concern being the number one objective to which all administrators aspire. However, more often than not, an administration will end with the company entering liquidation or, where the company has no property to permit a distribution to creditors, the dissolution of the company.

On June 27, 2024, the Supreme Court issued its opinion in Harrington v. Purdue Pharma L.P., 603 U.S. ____ (2024) holding that the Bankruptcy Code does not allow for the inclusion of non-consensual third-party releases in chapter 11 plans. This decision settles a long-standing circuit split on the propriety of such releases and clarifies that a plan may not provide for the release of claims against non-debtors without the consent of the claimants.

While franchising has typically been a more robust business model than others, it remains susceptible to broader economic and sectoral pressures, as The Body Shop’s recent entry into administration demonstrates.

In the unfortunate event that a franchisor or franchisee becomes insolvent, disruption is inevitable. However, insolvency doesn’t necessarily spell a terminal outcome. In this article we consider some of the key considerations for both franchisors and franchisees.

Handling franchisee insolvency: the franchisor’s approach

The High Court has handed down an important decision confirming that an unrecognised foreign judgment can be used to form the basis of a bankruptcy petition.

In rejecting the bankrupt’s appeal, the court confirmed that a debt arising pursuant to such a judgment is capable of constituting a “debt” for the purposes of section 267 Insolvency Act 1986 (the Act), despite the fact that the underlying judgment had not been the subject of recognition proceedings in England.

Facts

We find ourselves in a year of transition, with (whisper it) the economy stabilising and an election tipped for the second half of 2024. Surely only a fool, in times such as these, would seek to anticipate what change could unfold in the legal landscape over the next 12 months. Challenge accepted! For 2024 we have dusted off our crystal ball and we set out below our (educated) guesses of what to expect for the year (or two) ahead…

Implementation of UNCITRAL model law on Enterprise Group Insolvency

Election of Joe Graham to Partner

Joe Graham was elected partner in the New York office. This year, Joe played a leading role in the chapter 11 cases of Avaya, Benefytt and Diamond Sports. He regularly advises on out-of-court restructurings, bankruptcy litigation and distressed investments. Joe earned his J.D., magna cum laude, and his B.A. from the University of Notre Dame.

Kelley Cornish Inducted into “M&A Advisor Hall of Fame”

Summary

In this High Court case ICC Judge Barber ordered a disqualified director to compensate creditors for losses under s15A of the Company Directors' Disqualification Act 1986 (CDDA) as a result of negligent conduct in trading a company illegally.

Facts