The High Court has provided useful guidance on the interplay between the JCT regime for payment and claims in insolvency proceedings, in the recent case of Levi Solicitors LLP v Wilson and another [2022] EWHC 24 (Ch).

The application

In Re AFM (1932) Ltd (in liquidation) [2021] EWHC 3460 (Ch) the court confirmed that where an applicant is already contractually entitled – as against another party - to be reimbursed, together with interest, by that other party in an amount equivalent to the value transferred by that applicant under a related transaction, there cannot be a transaction at an undervalue pursuant to section 238 of the Insolvency Act 1986.

Facts

In FCA v Carillion [2021] EWCH 2871 (Ch), the High Court has confirmed that Financial Conduct Authority (FCA) enforcement action against Carillion Plc (in Liquidation) (Carillion) pursuant to certain provisions of the Financial Services and Markets Act 2000 (FSMA) does not constitute an “action or proceeding” and therefore falls outside of the scope of the statutory stay imposed by section 130(2) of the Insolvency Act 1986 (the Act).

Section 130(2) of the Act

Regulations have been published which, from 1 October 2021, will change the current restrictions on the use of winding up petitions (the regulations). A link to the regulations can be found here.

In summary, the regulations partially lift the temporary restriction on the use of winding up petitions imposed by the Corporate Insolvency and Governance Act 2020 and provide that:

On Aug 30, 2021, the 3rd U.S. Circuit Court of Appeals became the first federal appellate court to confirm that claims arising against a debtor following confirmation of a Chapter 11 plan, but prior to the plan’s effective date, are subject to discharge. This ruling serves as a strong reminder for all creditors and counterparties of a bankrupt entity to stay vigilant through the “effective date” of a Chapter 11 plan, and to strictly adhere to any administrative claims bar date established in a bankruptcy case.

Following a government announcement on 16 June, the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2021 (the Regulations) have been laid before Parliament, coming into force on 22 June.

Late in the evening on Feb. 23, 2021, the department store chain Belk Inc. and 17 affiliates filed prepackaged bankruptcy cases in the U.S. Bankruptcy Court for the Southern District of Texas. In addition to filing first-day motions, Belk also filed its disclosure statement and plan of reorganization, which already had been solicited and accepted by the vast majority of those entitled to vote.

After a somewhat leisurely start, case law regarding the new restructuring plan in Part 26A of the Companies Act 2006 now seems to be picking up pace.

On 13 January 2020, the High Court sanctioned the restructuring plans proposed by three UK companies in the DeepOcean group, under Part 26A of the Companies Act 2006.

In re Ultra Petroleum Corp. provides substantial support for the allowance of make-whole amounts pursuant to 11 U.S.C. § 502(b)(2) and that such are neither interest, unmatured interest nor the economic equivalent of unmatured interest. In re Ultra Petroleum Corp., No. 16-03272, 2020 WL 6276712, *3-*4 (Bankr. S.D. Tex. Oct. 26, 2020). The case also clarifies that bankruptcy courts may not permit a solvent debtor to ignore its contractual obligations to unimpaired classes of unsecured creditors.

Case Background