This update deals with the significant appeal judgment released yesterday by the Court of Appeal in the proceedings brought by the liquidators of Mainzeal Property and Construction Ltd (in Liq) (Mainzeal) against its directors. Our previous legal updates on the High Court decisions can be found here and here.

While the world wrestles with the day-to-day realities of the pandemic, 2021 will bring further challenges. With the memory of the litigious and regulatory aftermath of the global financial crisis still fresh, what should be on your radar?

1. Disputed margin calls and close-outs

The new National Security and Investment Bill, which aims to provide the Government with the necessary powers to scrutinise and intervene in business transactions to protect national security, will introduce a mandatory notification regime across 17 sectors in the UK economy. Although the Bill provides a carve-out for rights exercisable by administrators, insolvency practitioners will still need to be mindful of the risks that the Bill may have on distressed M&A transactions, which may be rendered void if captured by the regime and the notification requirements not complied with.

The real lesson from Debut Homes – don't stiff the tax (wo)man

The Supreme Court has overturned the 2019 Court of Appeal decision Cooper v Debut Homes Limited (in liquidation) [2019] NZCA 39 and restored the orders made by the earlier High Court decision, reminding directors that the broad duties under the Companies Act require consideration of the interests of all creditors, and not just a select group. This is the first time New Zealand’s highest court has considered sections 131, 135 and 136 of the Companies Act, making this a significant decision.

Recent M&A deals the teams have worked on involving insolvent corporates have highlighted the challenges which exist around the transfer of customer lists and databases, which are often a significant asset for the buyer.

Where the contractor has become insolvent, what obligations can an employer enforce when stepping-in to a previously novated professional consultant’s appointment in a design and build scenario?

The Corporate Insolvency and Governance Act 2020 was passed on 25 June 2020. The legislation has been in contemplation for a number of years, and has implemented a significant reform to the UK's restructuring and insolvency framework. It has also implemented certain temporary measures that are designed to protect and support businesses, protect jobs and, in doing so, attempt to preserve the economy during the COVID-19 pandemic.

Five years after it refused to pay rent and took the landlord to the High Court, and two years after it was placed into liquidation on account of unpaid rent, the final branch of litigation brought by the directors of Oceanic Palms Limited (in liq) has been cut down by the Supreme Court.

The UK Supreme Court in Bresco Electrical Services Ltd (in liq) v Michael J Lonsdale (Electrical Ltd) [2020] UKSC 25 has decided that the adjudication regime for building disputes is not incompatible with the insolvency process.

In the two judgments, Commissioner of Inland Revenue v Salus Safety Equipment Ltd (in liq) [2020] NZHC 1368 and Commissioner Inland Revenue v Green Securities Ltd (in liq) [2020] NZHC 1371, Associate Judge Bell significantly reduced the amount recoverable in each proceeding by liquidators. 

Both cases considered applications from liquidators to seek approval of their remuneration.  In Salus the amount claimed was $91,600 and in Green Securities it was $159,044.