Landlords might be starting to feel a little uneasy given the news that Superdry is considering a Company Voluntary Arrangement (CVA). Superdry is reportedly working with accountants to hash out a plan that will likely involve shutting down certain stores and cutting rent liabilities. The accountants instructed will be exploring whether either a CVA or a Restructuring Plan - both of which are processes which allow businesses to seek to reduce their liabilities to creditors – would be appropriate.
What exactly is a CVA?
When individuals are made bankrupt in Scotland, the formal term is 'sequestration', a trustee will be appointed to deal with the sequestration. That trustee will be responsible, amongst other things, for contacting creditors, assessing their claims, ingathering the assets of the debtor and converting them into cash in order to settle the costs of the sequestration and pay dividends to creditors.
The latest quarterly figures from The Insolvency Service for Q4 of 2023, covering the period October to December, show that company insolvency volumes in England and Wales reached a 30-year high. 25,158 registered companies entered some form of insolvency in 2023. The food and drink sector has not been immune to this, and indeed has seen some of the biggest rises in insolvency as many businesses face significant financial challenges.
Multiple headwinds
The High Court (Court) recently dismissed a petition seeking the winding up of a biofuel company (Company).
The ex tempore judgment is of note because it considers the standing of the Petitioner to bring the application and the consequences of a relevant witness not being cross-examined by the Petitioner on his affidavit evidence regarding the solvency of the Company.
Background
We have recently published a few blogs on the hot topic of company insolvencies, including more specifically about:
The English High Court decision of Hunt v Singh [2023] EWHC 1784 (Ch) has provided the most substantive authority on directors' duties to creditors since the decision of the Supreme Court in BTI 2014 LLC v Sequana SA and others [2022] UKSC 25 (“Sequana”). The case specifically considered the point at which a director’s duty to take into account the interests of creditors arises.
The festive period is a time for celebrating with loved ones, enjoying food and drink, and exchanging gifts. But it can also bring financial challenges. With rising living costs, interest rates at levels not seen for over a decade, and inflation still high, the cost of Christmas can present a further struggle, leaving many overstretched and facing unmanageable debts and insolvency come January.
2023 was a year where we saw buyers and sellers of commercial real estate assets not necessarily always aligned on pricing against a backdrop of lending headwinds. As the year drew to a close, visible signs of distress were reported to be emerging in certain corners of the real estate sector which may well bring fruitful opportunities in 2024 for property investors looking to acquire new assets via distressed or enforced sales. But what is a "distressed" property sale and what are the key considerations for buyers looking to acquire these types of assets?
The recent news on the BBC about the rise in insolvencies makes for tough reading. But those who are in business already know how difficult it is out there as they try to weather the trading conditions. Inflationary pressures are increasing the costs of providing goods and services to customers, eroding profitability.
The scheme of arrangement (Rescue Plan) prepared by the examiner of Mac Interiors Limited (Company) has not been approved by the High Court following strong objections from the Revenue Commissioners (Revenue).
In its challenge, Revenue argued that there had been an error in “class composition” or, in other words, an error in the classification of creditors that voted on the Rescue Plan.
Class Composition