What have we been up to?
Aside from our collective (but not wholly unexpected) disappointment that the lifting of the remaining Covid restrictions has been pushed back to 19 July, the team continue to advise on a wide range of insolvency related matters, amongst the recent highlights being:
From 1 October 2021, those restrictions will be replaced by new measures brought about under the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10 Regulations 2021) (the “Regulations”).
Under the Regulations, which are to be temporary and due to last until 31 March 2022, a creditor will be able to present a winding up petition against a corporate debtor where:-
(i) The debt is for a liquidated amount, which has fallen due and is not an ‘excluded debt’ (see below) (Condition A)
Further to our blog last week regarding the restrictions on presentation of winding-up petitions being (partially) lifted, the legislation replacing the existing restrictions on presenting winding-up petitions has now been passed and is due to come into force on 29 September 2021.
The Government has announced that it will be bringing an end (of sorts) to the temporary restrictions surrounding a creditor’s ability to present a statutory demand and winding up petition against a corporate debtor. Those restrictions, which were introduced under the Corporate Insolvency and Governance Act 2020 in a response to the Covid 19 pandemic, have been in place since June 2020 and were set to expire on 30 September 2021.
Opening the door for the SME market, Sir Alistair Norris has sanctioned the first ever restructuring plan for a “mid-market” company. The plan sanctioned in Amicus Finance PLC (in administration) is also the first restructuring plan proposed by insolvency practitioners and the first to cram down a secured creditor.
The sanction judgment is short, but the adjourned convening hearing that was dealt with by Mr Justice Snowden (the first hearing was before Mr Justice Trowers) gives some insight into the plan.
The recent case of Re A Company [2021] EWHC 2289 (Ch) outlines how the coronavirus test for winding up petitions will be applied by the Courts.
Two controversial mechanisms are available in many circuits to assist parties in a chapter 11 case to reach a global resolution and obtain plan confirmation: non-consensual third-party releases and preliminary stays against third-party litigation.
Is there any downside to a debtor filing a motion to estimate a claim? Or, is an estimation motion simply procedural in nature? As the debtors recently discovered in In re SC SJ Holdings LLC, a motion to estimate a claim before a bankruptcy court may not always lead to a significantly reduced claim, and may impact plan confirmation.
The Facts
CVAs are a useful tool in the restructuring tool kit, and may prove extremely helpful to retailers or hospitality companies as a means of supporting those businesses as they emerge from the pandemic. The flexibility of a CVA and the ability to shape the terms of a proposal to meet the specific needs of a business have seen an increasing number of consumer led businesses use CVAs, and they have become popular as a means to restructure businesses that have a significant lease portfolio.
Section 1930(a)(6) of Title 28 requires the payment of quarterly fees to the United States Trustee (the “UST”) for each quarter that a bankruptcy case is open. The amount of fees is calculated based on the amount of disbursements made by the debtor during each quarter. But, are these fees payable when a trust, established by a confirmed plan, makes distributions rather than a debtor?