2019 has been a busy year for restructuring specialists. Although the UK economy narrowly avoided a recession, a combination of continued domestic and international political uncertainty, decreased consumer confidence and challenging conditions in certain sectors has meant that a number of businesses have gone through restructurings and, in some high-profile cases, insolvency processes during the year.

The latest amendments to the Kazakhstan Rehabilitation and Bankruptcy Law were signed on April 2, 2019, and became effective from April 14. The amendments enhance the priority right of secured creditors through the acceptance of pledged assets in kind or the implementation of self-facilitated foreclosure over pledged assets. Notably, the law provides that pledged assets are carved out from bankruptcy estates.

Priority of Claims of Secured Creditors

To exercise a priority right, a secured creditor must comply with the following procedure:

In this week’s update: The court finds that selfdealing by a director and a share buyback were void, the PERG report on compliance with the Walker Guidelines, the BVCA and EY review private equity portfolio company performance, the QCA reports on AIM company corporate governance and a few other items. 

Court confirms self-dealing by director was void

Being involved with a company which is experiencing financial difficulties is clearly a stressful experience for directors. As well as having to deal with the operational consequences of the company’s distress, directors must ensure that they comply with their duties and obligations under the Companies Act 2006 (CA2006) and the Insolvency Act 1986 (IA1986). Directors of listed entities are in a particularly difficult position, as in addition to those duties they must comply with their obligations to the markets.

Directors’ duties

In this week's update: directors did not need to consider the rights of creditors when declaring a dividend as the company was not insolvent, the Law Commission is seeking views on the law of intermediated securities, polling information can be inside information and a couple of other items.

Court considers whether demerger by dividend was valid (part 4)

The UK government has published a draft Finance Bill 2020, which includes a provision that, if enacted, will give HM Revenue & Customs (HMRC) secondary preferential creditor status for certain taxes which a company has collected but failed to pay to HMRC on the date it enters insolvency.

New Priority Status

In this week's update: a distribution was valid despite discrepancies in the accounts justifying the dividend and an examination of vexatious resolutions.

Court considers whether demerger by dividend was valid (part 2)

In this week's update: directors implementing a management buy-out did not owe fiduciary duties to the other shareholders and a distribution was valid despite the relevant accounts not being in the usual format.

Directors did not owe fiduciary duty to shareholders

The High Court has held that the directors of a company did not owe a fiduciary duty to the company’s shareholders when implementing a management buy-out (MBO).

What happened?

Directors and officers of private companies are responsible for managing and running business. This responsibility is not limited to disciplinary liability (such as termination of employment), but also involves civil law liability (such as payment of damages) as well as administrative and even criminal liability. In some cases, the liability may be broad and contain no reasonable exceptions that might be available in other jurisdictions. This LawFlash summarizes the extent of liability that company directors and officers could face under Kazakhstan law.

When a business entity that is regulated by the Federal Energy Regulatory Commission (FERC) is closely related to another business entity, FERC takes the position that under some circumstances it may treat the two different legal entities as if they were one single entity.