(Promontoria (Oak) Ltd v Emanuel; Emanuel v Promontoria (Oak) Ltd; Promontoria (Henrico) Ltd v Samra; Promontoria (Chestnut) Ltd v Simpson & Anor; Bibby Invoice Discounting Ltd v Thompson Facilities and Project Management Services Ltd & Anor)

Introduction

This morning, the Court of Appeal has handed down landmark guidance on how far a defendant in litigation can look under the bonnet of their pursuer's commercial transactional documents and check out the mechanical parts of a deal to which the defendant is not party.

In our previous commentary, we concluded that the ‘The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021’ (Regulations) had enacted a tick-box exercise for experienced market participants.

According to the American Bankruptcy Institute, total commercial Chapter 11 filings in July 2021 decreased 62 percent from the previous year. Commercial Chapter 11 filings totaled 244 in July 2021, down from the July 2020 total of 644. Lender forbearance, continued low interest rates, and massive financial intervention by the U.S. and economies world-wide have allowed financially distressed companies to survive during the pandemic. As relief programs recede, however, we will likely see an increase in Chapter 11 filings.

The case of Triple Point Technology Inc (Triple Point) v PTT Public Company Ltd (PTT) [2021] UKSC 29 has prompted considerable discussion in the construction industry.

On 12 May 2021 the FCA issued finalised guidance for insolvency practitioners who are tasked with managing insolvencies of regulated firms.

Aiming to help insolvency practitioners understand how to deal with firms in line with FCA requirements, the guidance covers the process from end-to-end including expectations in the pre-insolvency stage and specific procedures relating to insolvencies and restructuring. The aim of the guidance is to assist with the minimising of the impact of a failure of a regulated firm

• The judgment in Bresco Electrical Services Limited (in liquidation) v Michael J Lonsdale (Electrical) Limited recognised that insolvent parties have an unfettered right to adjudicate.
• In so doing the judgment opened the door for Insolvency Practitioners to use adjudication, or the threat of adjudication, to resolve disputes arising under construction contracts.

PRIOR TO BRESCO

The current legislation, particularly the Coronavirus (Scotland) Act 2020; Coronavirus (No 2) (Scotland) Act 2020 and the Corporate Insolvency and Governance Act 2020, contain measures to protect debtors affected by Covid-19.

These measures restrict the options available to landlords and creditors and have been extended to remain in force until 30 September 2021, although some measures will cease on 30 June pending subject to any further extension which may be granted.

Commercial Leases

Irritancy

Essential points to consider if your company is looking at ways to improve balance sheet strength, whether strategically, opportunistically, or to help repair the damage done by the pandemic.

60 SECOND BASICS

WHAT IS IT

SUMMARY

The Government is attempting to shackle transfers to connected parties by way of pre-pack Administration.

The new draft 'Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021', published 24 February (Draft Regulations), are designed to further increase transparency for the wider stakeholder body in connection with pre-packaged Administration business and asset sales to management, sponsors and other connected parties.