ADVISORY | DISPUTES | TRANSACTIONS Restructuring and insolvency roundup January 2018 In this roundup, we consider four cases with implications for all those involved in the restructuring and insolvency sector. This edition includes an article on crowdfunding, a sector which continues to be of interest to practitioners giving the changing regulatory landscape and the risk to investors. Other cases include two Court of Appeal decisions and cover privilege in bankruptcy, the adequacy of ATE policies, and the requirement for boards to be quorate when directors appoint administrators.
A recent application made by the insolvency practitioner of Agrokor, a major Croatian conglomerate, resulted in recognition in England of a stay of civil proceedings against the group. The purpose of the application was to halt any proceedings in relation to Agrokor's securities and debt obligations containing English law and jurisdiction provisions, pending the restructuring in the Croatian insolvency proceedings of the group's affairs.
In UBS AG v Kommunale Wasserwerke Leipzig GmbH(1) the Court of Appeal heard an appeal relating to whether complex, loss-making financial transactions were enforceable against the respondent (KWL) in circumstances where they had been entered into against the backdrop of a corrupt relationship between the appellant counterparty (UBS) and the respondent's agent (Value Partners).
The professional indemnity insurer of an insolvent independent financial adviser (Target) successfully relied on an insolvency exclusion in the policy to deny liability to third party (former) clients of Target1.
In 2005 Target had advised Mr. and Mrs. Crowden to invest £200,000 in a “Secure Income Bond” issued by SLS Capital SA in Luxembourg and Keydata Investment Ltd.2 SLS went into liquidation in 2009.
The High Court has considered a recent Court of Appeal ruling on whether trustees in bankruptcy should be able to deploy privileged documents in the discharge of their duties.
The existing position under Avonwick
The facts of Shlosberg v Avonwick Holdings Limited [2016] EWCA Civ 1138 involved a company called Webinvest. Webinvest was beneficially owned by Mr Shlosberg. Avonwick lent US$100 million to Webinvest, with Mr Shlosberg personally guaranteeing the loan.
This case clarifies that the Third Parties (Rights Against Insurers) Act 2010 (the 2010 Act) does not apply retrospectively, such that the Third Parties (Rights Against Insurers) Act 1930 (the 1930 Act), and only the 1930 Act, will continue to apply in circumstances in which both (i) the insured's insolvency occurred; and (ii) the insured's liability was incurred, prior to 1 August 2016.
Winding up petition struck out as an abuse of process where the court was not satisfied that the petitioner was a creditor.
Can a company file a notice of intention to appoint an administrator (NOI) if administration is just one of a number of potential options being explored for rescuing the company?
Are funds subject to an IVA if they are received by a debtor after a certificate of completion has been issued by the supervisor?