As Insurers underwriting risks in Spain are aware, the recent financial crisis resulted in a significant increase in claims against directors by trustees appointed when a company enters into an insolvency process. Insolvency proceedings in Spain reach a determination as to the culpability of directors implicated in the company's demise. In this context, the Spanish courts will look at whether the directors were "guilty" or whether the insolvency was "fortuitous". However, not all determinations will express whether the director's conduct was in bad faith or wilful.
The Insolvency Rules 2016 came into force on 6 April 2017 and seek to modernise the insolvency process. These changes were, in part, brought about by the changes to insolvency law and practice as a result of the Small Business, Enterprise and Employment Act 2015 ("the Act"). Now is therefore a good time to take stock of the other key changes brought about by the Act that were anticipated to impact on D&O claims.
In this Update
- on April 24, 2017, the Alberta Court of Appeal affirmed the Alberta Court of Queen’s Bench’s decision in Redwater Energy Corporation (Re), 2016 ABQB 278 (Redwater)
- reasons for the Redwater decision
- the issues in Redwater raise various important policy concerns regarding land owners, the public at large and the oil and gas industry
- background and significant implications of Redwater
Introduction
In Caetano v Quality Meat Packers, 2017 ONSC 1199, Justice Belobaba of the Ontario Superior Court recently had opportunity to consider whether two representative proceedings commenced on behalf of two separate groups of employees against an insolvent employer ought to be struck because, despite the actions having been commenced within the applicable two year limitation period, the plaintiffs in those two actions had failed to obtain the necessary representation orders within the two year period.
The Insolvency Rules 2016 ("IR 2016") are due to come into force in England and Wales on 6 April 2017. Its purpose is to modernise and streamline the insolvency process in England and Wales in order to reduce the costs and potentially increase returns to creditors. IR 2016 incorporates the changes to insolvency law and practice brought about by the Deregulation Act 2015 and the Small Business, Enterprise and Employment Act 2015.
This article highlights the principal areas of change and their practical implications.
Background
Fomento De Construcciones Y Contratas SA v Black Diamond Offshore Ltd (Court of Appeal hearing)
The Court of Appeal has rejected an appeal brought by a leading Spanish company ("FCC") against a first instance decision that an event of default had occurred in respect of a debt instrument.
Background
Recent cases we have been involved in have highlighted the need for Insolvency Practitioners to pay careful attention to the effect that block transfer orders have on administrations where the exit route is a creditors' voluntary liquidation ("CVL"). Failure to do so could risk the appointment of liquidators being invalid.
The statutory requirements
Campbell v Peter Gordon Joiners Ltd (in liquidation) and another (2016) UKSC 38 considered whether an employee could successfully bring a civil action against a director of a company in liquidation for having failed to obtain appropriate employers' liability insurance.
C was an apprentice joiner employed by a company who suffered an injury at work whilst working with an electric saw. The company held employers’ liability insurance but it did not respond to C's claim as the policy excluded claims arising from the use of “woodworking machinery” powered by electricity.
When the board of Hanjin Shipping voted unanimously to file for receivership at the end of August, it precipitated the largest container line bankruptcy in history. The collapse of the company is partly due to the pressure on the shipping industry, which has been unrelenting since the 2008 financial crash. Much of this has to do with the increase in capacity in the industry – vessels built in the 1990s typically carried around 2,000 TEUs; by 2015 this had increased to 10,000.
In Essar Steel Algoma Inc. (Re), Justice David Brown of the Ontario Court of Appeal held that the ambit of orders “made under” the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the “CCAA”), and thus requiring leave to be appealed, is broad. Though concluding that the appellant in this case required leave to appeal, he nonetheless ordered the leave motion be expedited.