A company voluntary arrangement (CVA) is a tool which has been widely utilised by companies seeking to restructure and compromise liabilities.

In recent years CVAs have been in the limelight because of attacks by landlords who feel that they have been unfairly prejudiced by the CVA terms. Largely, challenges such as those to the Regis and New Look CVAs have been unsuccessful, but arguments about unfair prejudice based on “vote swamping” were left open for future debate.

“Creative destruction” occurs when something new kills off whatever existed before it.

IPhone Example

Just think, for example, of all the creative destruction that the iPhone has wrought! It has destroyed businesses that provided telephones and phone books, cameras and film, audio recordings and players, newspapers and newsstands, and related services.

City of Chester is the oldest city in Pennsylvania, incorporated as a borough in 1701 and as a city in 1866, and is located on the Delaware River between Philadelphia and Wilmington.

Unfortunately, the City is also in Chapter 9—having filed bankruptcy on November 10, 2022.

The City’s bankruptcy filing causes a ruckus because:

Can a liquidator run an unjust enrichment claim to seek to recover PAYE and NIC liabilities from a company’s directors arising from the company’s use of a “disguised remuneration” employee benefit trust (“EBT”) scheme? Based on the findings of ICC Judge Barber in the case of Re Ethos Solutions Ltd, the answer is “no”.

EBTs: Background

On Sunday evening, March 12, 2023, the US Department of the Treasury, Board of Governors of the Federal Reserve Board (Federal Reserve) and Federal Deposit Insurance Corporation (FDIC) released a joint statement announcing various actions to stabilize the US banking system, in light of the widely publicized failures of Silicon Valley Bank (SVB) and Signature Bank (Signature Bank), each of which was closed by their respective state chartering authorities, with the FDIC appointed as receiver.

The U.S. Supreme Court does not like bankruptcy benefits for individual debtors. It really doesn’t.

An example from a couple years ago is Fulton v. City of Chicago, where the U.S. Supreme Court finds a way to declare:

An all too typical fact pattern involves a small-time ne’er-do-well infringing on the rights of a much bigger corporation. When the corporation is forced to bring a lawsuit, the “little guy” infringer cries poverty and seeks a settlement. An oft-used tactic of corporations is to settle the matter quickly (and before too much in attorneys’ fees has been incurred) for a relatively modest sum (or even no money at all) while also including a mechanism by which any breach of the settlement agreement triggers the filing of an agreed judgment for a large sum of money.

Can a corporate debtor be denied a Subchapter V discharge under § 523(a), despite this § 523(a) language (emphasis added):

• “A discharge under section . . . 1192 [Subchapter V] . . . does not discharge an individual debtor from . . . ”?

A recent Bankruptcy Court opinion (in Avion Funding) says, essentially, this: “No! You can’t paint over explicit statutory language.”[Fn. 1]

Such recent opinion:

Supply chains are facing a fresh barrage of challenges. There are an almost infinite variety of issues that can arise within the supply chain. Minor irritants that historically may have just made business a bit more difficult to transact can, in the current environment, cumulatively exert significant pressure. Additionally, an over reliance on a third party or failure to spot the weakest links in this chain could have a catastrophic impact on your business

In our latest insight, we consider how to identify pinch points in your supply chain and de-risk them.

Where a commercial property is sold by a receiver or insolvency practitioner (IP), VAT must be charged on the sale if the owner had exercised and properly notified an option to tax (OTT) in respect of the property. The IP acting on behalf of the seller needs to establish whether an OTT has been made and notified so that VAT is charged , if needed.  This can be difficult if company records are in disarray, directors of the insolvent company are non-cooperative and/or the IP or receiver has limited knowledge of the property and company.