What matters
This article delves into some key considerations for suppliers when dealing with customers where there may be a risk of non-payment or insolvency circumstances and how a supplier can minimise the risk to their cash flow and business.
What matters next
What matters
This article delves into some key considerations for suppliers when dealing with customers where there may be a risk of non-payment or insolvency circumstances and how a supplier can minimise the risk to their cash flow and business.
What matters next
When does the directors' duty arise to consider creditors' interests in the face of insolvency if a liability is disputed? Hayley Capani and Kate Garcia consider the case of Hunt v Singh and conclude we still don't have all the answers.
The Supreme Court handed down its long-awaited judgment in BTI 2014 LLC v. Sequana S.A. [2022] UKSC 25 (Supreme Court - BTI v Sequana) concerning the fiduciary duty of directors to act in good faith in the interests of the company.
This is the first article in 'Back to Basics', a series of articles looking at insolvency processes in Scotland. In this article I examine the court process for winding up a company.
A winding up petition is a form of legal action that can be used when a company is unable to pay its debts as they fall due. Sections 122 to 124 of the Insolvency Act 1986 (‘the Act’) deal with how to wind up a company in Scotland.
When is a company deemed unable to pay debts?
The COVID-19 pandemic together with Brexit have meant many commercial relationships have had to stop or risk having to do so in the future. Are you ready to deal with what happens if any of your key contracts terminate?
No contract is 100% ‘Brexit-proof’. The current uncertainty about whether there will or won’t be a trade deal with the EU makes it unclear what contracts will be profitable and which won’t in 2021. For many businesses, some of their contractual relationships may well become untenable in the period after 11pm on 31 December 2020.
The government has published the Corporate Insolvency and Governance Bill which, if passed, will significantly restrict suppliers’ ability to exit commercial agreements due to restructuring or insolvency-related causes.
That the current pandemic has thrown a curveball at many businesses is a given.
At the end of February, the Bank of Scotland Business Barometer reported that overall business confidence in the UK was at a net balance of 23%. Only two months later and confidence plunged to minus 29%.
It seems that business disruption due to coronavirus is pretty inevitable. What should you as a company director be doing if the disruption means your business starts to suffer?
What changes for me as a director?
As a director, you know that you owe duties to the company. When the business starts heading towards insolvency, there is a change of emphasis and instead of doing what is best for the shareholders, you have to change and consider what the consequences of your actions will be for the company’s creditors.
In Saw v Wilson, the Court of Appeal held that a second ranking floating charge would be valid and enforceable, even if at the time it was created there were no uncharged assets to which the floating charge could attach.
Facts of the case
The Financial Accounting Standards Board (FASB) issued proposed amendments on June 26, 2013, to provide guidance about management's responsibilities in evaluating a company's going concern uncertainties in addition to the timing and content of related footnote disclosures. Even before a company’s liquidation is imminent, there may be uncertainties about a company’s ability to continue as a going concern and, therefore, about its going concern presumption (going concern uncertainties). Currently, there is no guidance in the U.S.