Companies are under increasing pressure to examine their ESG policies, particularly after the recent COP26 conference. The UK's commitment to achieving net-zero emissions by 2050 has intensified the ESG focus.
What is ESG?
ESG, or Environmental, Social and Corporate Governance, is a term used to describe a set of standards that measures a business' environmental and social impact.
Why is ESG important in a distressed restructuring?
The High Court (Court) had to determine whether proceeds from two investments in the estate in the bankruptcy of Bernard McNamara (McNamara) were payable to NALM under its security package, or whether they should be retained in the estate in the bankruptcy of McNamara for the benefit of creditors generally (substantive question).
The English tax authority, HMRC, has successfully challenged the restructuring plans put forward by The Great Annual Savings Company Limited (GAS) and Nasmyth Group Limited (Nasmyth).
This is the first time that HMRC has actively challenged restructuring plans at the sanction hearing. The key takeaways from the judgments:
Nasmyth
Background
The impact of the opening of insolvency proceedings on options granted in combined contracts (for example, a lease contract containing a call option for the leased real estate) had been in dispute for a long time.
Decision
The Austrian Supreme Court held that call options granted in lease contracts where the option fee has been paid do not expire with the opening of insolvency proceedings, nor are they subject to the right of the insolvency administrator to terminate the lease contract.
The German Federal Court of Justice (BGH) has ruled on the question of whether an agreement that grants release from a contract on grounds of insolvency or the opening of insolvency proceedings is effective.
Background
In the recent case of Re JD Group Ltd in liquidation; Bhatia v Purkiss (as liquidator of JD Group Ltd) a company director appealed a decision that he was liable for VAT fraud.
Background
Mr Bhatia was the sole director of a company trading in mobile phones. He was sent a HMRC notice explaining the risks of mobile phone trading and liability for involvement in VAT fraud.
On 12th May 2023, the High Court of England and Wales issued another significant judgment which is expected to advance the progress of reciprocal enforcement of judgments between the courts of the United Arab Emirates (UAE) and England and Wales.
The High Court (Court) has found that it was not appropriate to make a winding up order in respect of a company under section 760(2) of the Companies Act 2014 (Act), where no party was nominated or consented to act as liquidator.
The Dutch Supreme Court ruled that "setting aside" or replacing the board is not a requirement to qualify as a de facto director. De facto directors are not required to manage the company instead of, and to the exclusion of, the formal directors.
Background
Under Dutch law, as a matter of principle, only the company (ie a Dutch B.V. or N.V.) is liable for its debts. The directors of the company are in principle not liable.
The High Court has handed down the most significant decision on restructuring plans since Virgin Active in 2021, applying cross-class cram down to an ad hoc group of dissenting noteholders (the AHG).
Background