Wind the clock back a couple of years to (dare I mention it…) the Covid-19 pandemic, and insolvency practitioners were getting mildly giddy about a new development in the form of a standalone moratorium. Slotting in at the forefront of the Insolvency Act 1986 courtesy of the Corporate Insolvency and Governance Act 2020 (CIGA), the moratorium was designed to give companies a breathing space to find a solution to their troubles when insolvency was knocking on their door.

Amidst the cost of living crisis, businesses are folding in record numbers, with barely a week passing without news of a big company casualty. Paperchase is the latest retailer to collapse into administration, with the business being snapped up by Tesco for sale in its superstores and 820 jobs reportedly at risk. So how can we identify the businesses that are in the danger zone and could be heading for insolvency?

1. Profit warnings

This post is about a junkyard, hogs getting slaughtered, and a bankruptcy judge poised to sanction a creditor and her counsel. The message from the case to would-be claimants in other cases is simple: do not “overreach.”In re U Lock, Inc., Case No. 22-20823, 2023 WL 308210, at *1 (Bankr. W.D. Pa. Jan. 17, 2023).

The concept of “property of the estate” is important in bankruptcy because it determines what property can be used or distributed for the benefit of the debtor’s creditors. Defined by section 541 of the Bankruptcy Code, “property of the estate” broadly encompasses the debtor’s interests in property, with certain additions and exceptions provided for in the Code. See 11 U.S.C. § 541. Difficult questions can arise in a contractual relationship between a debtor and a counterparty about whether an entity actually owns a particular asset or merely has some contractual right.

In 2022, there were several high-profile crypto bankruptcy filings. A big question in these cases is whether there will be any money to satisfy unsecured creditor claims. If there are funds to distribute, then the creditors’ claims will become more valuable, and the cases will become even more interesting.

While many businesses (particularly in the retail, leisure and hospitality industries) will have been hoping to capitalise on a busy festive period, sadly for many the busy period came too late as corporate insolvencies rose again in December. Overall, company insolvencies were 32% higher than December 2021, and 76% higher than in December 2019 (i.e.

It’s often hard to persuade a bankruptcy court to grant a motion for substantial contribution. Any attorney thinking about making a motion should first ask herself two questions. First, has my work benefitted both my client and other creditors? Second, did my work result in more than an incidental benefit to the bankruptcy estate? If the answer to either question is no, then the attorney should forget about making the motion. The time spent on it will be wasted, and the motion will be denied.

There have been some very gloomy stories in the press over the last week or so about rising company insolvency rates. All rather unwelcome during the season of goodwill.

Everyone knows that British businesses are facing a hugely difficult time with challenges coming from all directions – including high energy bills, rising interest rates, strikes, geopolitical uncertainty etc. etc.

But amidst the gloom there are some positives. For example:

As the chill of recession bites for homes and businesses alike, SMEs are faced with the daunting prospect of navigating their way through the bleak mid-winter. In October 2022, inflation reached 11.1% and company insolvencies were 38% higher than the same period last year. Creditors’ voluntary liquidations in the same period were 53% higher than in 2019 (i.e. pre-pandemic), continuing the theme of businesses being forced to consider this terminal insolvency process, as following the pandemic they have struggled to adapt to the challenging market conditions.

We have previously blogged about Siegel v. Fitzgerald, the Supreme Court decision last June that invalidated the 2018 difference in fees between bankruptcy cases filed in Bankruptcy Administrator judicial districts and U.S. Trustee judicial districts.