In this quick guide we focus on working capital and consider ways a business can seek to preserve all important liquidity through challenging and unpredictable periods. Supply chain issues, the battle against inflationary price hikes and other external stressors mean businesses globally are being challenged. What can senior management do in order to manage and mitigate risk to a company's financial health and stay away from the edge?
Practical Tips
Managing the financial health of a business to ensure it continues to be viable and successful can be challenging, particularly in today’s economic environment.
June 2023
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In two recent blog posts we discussed the challenge made to the Company Voluntary Arrangement (CVA) of Mizen Build/Design Ltd (the “Company”) by Peabody Construction Limited (“Peabody”) and the finding of (i) a material irregularity based on failure to disclose information to creditors in the CVA proposal, and (ii) unfair prejudice based on vote swamping.
On May 8, 2023, online cryptocurrency exchange platform Bittrex, Inc. and three of its affiliated entities (collectively “Bittrex”) filed for chapter 11 to wind down their U.S. and long-dormant Malta operations. The bankruptcy filing followed costly regulatory investigations and an April 17, 2023 SEC enforcement action alleging that Bittrex improperly sold crypto assets that were securities. Unlike other crypto bankruptcies, Bittrex did not risk, hypothecate, or loan cryptocurrencies needed to meet its contractual obligations to its customers.
These continue to be challenging times and we recognize that the need for cross-border advice on insolvency and restructuring matters may be required at short notice. Conyers’ attorneys are insolvency and restructuring experts. We are well-equipped to advise at all stages where financial stability becomes an issue and innovative solutions are required.
The Complications Involved with Cross-Border Restructuring
With increased stress in global, domestic, and regional economies, the number of Australian businesses at risk of bankruptcy is approaching a three-year high.
On 21 April 2023, the English High Court handed down its written reasons for sanctioning the Adler Group restructuring plan proposed under the new Part 26A regime of the UK’s Companies Act 2006, which raised questions regarding the jurisdiction of the Court, cross-class cram downs, pari passu issues and competing valuations.
What can we say about the outcome of the GAS (Great Annual Savings Company Limited) sanction hearing that hasn’t already been reported?
It’s impossible not to comment on the fact that the plan was not sanctioned, and as a consequence of fierce opposition from HMRC that it avoided cram down. Nor that the court refused to sanction the plan on the basis that the conditions for cram down were not met – the court was not satisfied that HMRC would be better off under the plan and even if it were the judge said he would have not exercised his discretion to cram down.
The recent case of Dolfin Asset Services Ltd v Stephens & Anor (Re Dolfin Financal (UK) Ltd) [2023] EWHC 123 (Ch) (“Dolfin“) concerned a special administration, but it has relevance to administrators more generally. In particular, when it comes to the judge’s view of what is meant by the word “consider” – which is phrase used in the insolvency legislation when it comes to making decisions.
In a decision likely to be welcomed by both debtors and lenders, the High Court has held that a charge granted by Avanti Communications Limited (“Avanti”) was properly characterised as a fixed charge (rather than a floating charge) notwithstanding that the chargor retained an element of control over the charged assets. A key plank of the decision was that the relevant assets were not ‘fluctuating assets’ or ‘stock in trade’ that the chargor might be expected to dispose of in the ordinary course of its business.