Introduced by the Corporate Insolvency and Governance Act 2020, the restructuring plans regime set out in Part 26A of the Companies Act 2006 (Plans) has quickly proven a popular route for corporate financial rescue. This is in large part due to the fact that it allows for a plan to be imposed upon dissenting creditor classes in certain circumstances. This is known as "cross-class cramdown".

Welcome to the first issue of Insolvency Matters, our round-up of recent legal developments affecting insolvency and restructuring.

Case round-up

The U.S. Court of Appeals for the Seventh Circuit recently upheld a trial court’s rejection of a borrower’s allegations that a mortgagee and its servicer violated the federal Fair Credit Reporting Act and the federal Fair Debt Collection Practices Act by allegedly inaccurately reporting her loan as delinquent following the borrower’s successful completion of her bankruptcy plan, allegedly rejecting her subsequent monthly payments, and filing a foreclosure action based on the supposed post-bankruptcy defaults.

The U.S. Court of Appeals for the Eleventh Circuit recently held that the anti-modification provision in the federal Bankruptcy Code applies to loans secured by mixed-use real properties, such as the large parcel at issue here which functioned both for commercial use and as the debtor’s principal residence.

A copy of the opinion in Lee v. U.S. Bank National Association is available at: Link to Opinion.

This article was first published by Insol World Magazine in Q1 of 2024.

Insolvency office-holders in the UK and elsewhere frequently rely upon litigation funders to finance their legal proceedings and, accordingly, developments in the funding market are of keen interest to insolvency professionals.

Breathing Spaces and Mental Health Crisis Moratoriums (MHCM) were introduced by the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the "2020 Regulations").

A look back at bankruptcy trends and litigation in 2023 reveals a spike in bankruptcy filings driven by economic factors and fallout from the pandemic while in upper courts several interesting cases were decided involving proofs of claim, stay violations, and discharge issues.

In R (on the application of Palmer) v Northern Derbyshire Magistrates' Court [2023] UKSC 38, the Supreme Court has ruled that an administrator appointed under the Insolvency Act 1986 is not an "officer" of the company.

This case considered this issue within the meaning of section 194 of the Trade Union and Labour Relations (Consolidation) Act 1992 (the TULRCA). As a result of the Supreme Court's decision, administrators will not be exposed to potential criminal liability for failing to notify the Secretary of State of collective redundancies.

An analysis of recent statistics show what the Insolvency and Tax Disputes teams at Mishcon de Reya have long experienced – that HMRC is not in the habit of overlooking an outstanding debt.

The U.S. Court of Appeals for the Eighth Circuit recently affirmed the dismissal of several conversion claims brought by the estate of a deceased account holder against a bank, holding that one of the conversion claims was time-barred, and that the estate did not have standing to pursue the remaining conversion claims as the alleged injury was not fairly traceable to the bank.

A copy of the opinion in Muff v. Wells Fargo Bank NA is available at: Link to Opinion.