On 5 July 2023, the High Court sanctioned the restructuring plan proposed by Prezzo Investco Limited (theCompany) despite opposition from HMRC.

Shareholders are among the many who have lost money in the multi-billion euro insolvency of the former DAX30 payment provider Wirecard and its allegedly fraudulent business practices. Wirecard had to file for insolvency after assets worth €1.9bn could not be found. Collectively, the shareholders claimed around €7bn in damages for intentional capital markets law violations by former Wirecard executives. Unsurprisingly, the shareholders are now trying to minimise their losses and secure at least partial payment on their claims from the insolvency estate.

Summary

The Supreme Court held that when directors know, or ought to know, that the company is insolvent or bordering on insolvency, or that an insolvent liquidation or administration is probable, they must consider the interests of creditors, balancing them against the interests of shareholders where they may conflict. The greater the company’s financial difficulties, the more the directors should prioritise the interests of creditors.

Background

On 18 March 2021, the UK Government published its white paper on restoring trust in audit and corporate governance. On 31 May 2022, the Government published its response to the consultation.

In Parts 1, 2 and 3 we covered some easy traps to fall into when trying to execute a distressed financing tr

A new Act, which received Royal Assent on 15 December 2021, extends the existing directors’ disqualification regime to the directors of dissolved companies.

Before 1st October 2021, French law did not provide for the possibility to cram down shareholders, other than under Article L. 631-19-2 of the French Commercial Code, which sets conditions which are so stringent that it is not used in practice.

Directive 2019/2023 has let EU member states decide whether shareholders should be a class of “affected parties” subject to cross-class cram down or whether other measures should be implemented to avoid shareholders preventing, or making it difficult, in an unreasonable manner, the approval of a restructuring plan.

A new bill, which the UK Government introduced to Parliament on 12 May 2021, seeks to extend the existing directors’ disqualification regime to the directors of dissolved companies.

On 18 March 2021, the UK Government published its long-awaited white paper on restoring trust in audit and corporate governance.

This follows a series of high-profile audit errors and major corporate collapses, including those of BHS in 2016 and Carillion in 2018, which led the Government to commission three independent reviews into different aspects of the UK’s audit, reporting and corporate governance systems.

The white paper targets large listed and AIM-listed companies, and large private companies where there is a public interest, and primarily focuses on:

Last month, the German Federal Ministry of Justice published draft legislation that could fundamentally change the restructuring landscape in Germany.

An essential part of the law is the introduction of a corporate stabilisation and restructuring regime, which establishes a comprehensive legal framework for non-consensual out-of-court restructurings in Germany on the basis of the EU's 2019 restructuring directive.