The first half of 2024 saw a number of high-profile insolvencies in the fashion sector including the online retailer Matches Fashion and brands such as The Vampire’s Wife and Roksanda. Indeed Matches was reported to have owed over £35.9 million to various luxury brands, with a low percentage in respect of the amount recovered for supplier brands.

So, what can brands do to guard against retailers and wholesalers in the fashion supply chain becoming insolvent?

Retention of title – Incorporate a robust clause into your sale contracts

Regularly the news media reports that a fashion business is in difficulty or is about to, or has gone into, administration. But what is the purpose of administration? What does an Administrator do? Most importantly how should suppliers deal with an Administrator? And what does administration mean for a company’s creditors?

Purpose

Insurers with unwanted runoff blocks of business should consider the latest guidance from insurance regulators on potential transactional structures that could mitigate this issue.

Companies in Chapter 11 must publicly report substantial financial information — indeed, more information should be reported or available publicly in Chapter 11 than outside of Chapter 11. This paper analyzes what information must be publicly reported or disclosed under the securities laws, the Bankruptcy Code and Bankruptcy Rules; what debtors do to minimize public reporting; and what creditors can do to get the public reporting they deserve.

Debtors May Stop Public Reports Under the Securities Laws.

The Package Travel Regulations (“PTRs”), which came into force in 2018, have been tested significantly in recent years with failures such as Thomas Cook and Monarch, in addition to the COVID-19 pandemic.

What Happened?

The Bottom Line

One feature commonly seen in commercial lending transactions is a waiver of the borrower’s authority to file for bankruptcy without the consent of the lender. While such “blocking” provisions are generally upheld where the equity interest holders are the parties with such rights, they are generally unenforceable as a matter of public policy when such protection is given to a creditor with no meaningful ownership interest in the corporate debtor.

In what was described as a “momentous decision for company law”, the Supreme Court in BTI 2014 LLC v. Sequana SA and Others [2022] UKSC 25 (“Sequana”) confirmed the existence of a duty owed by company directors to consider the interests of its creditors when nearing insolvency.

It marks the first time the nature, scope, and content of directors’ duties to creditors when a company is nearing insolvency has been considered by the Supreme Court.

Overview

When enacting the Bankruptcy Code, Congress sought to strike a balance amid the confluence of different — and often competing — interests held by debtors, secured creditors and various unsecured creditor constituencies (including landlords) through a framework of statutory protections. This has – at times – led to litigation over differing statutory interpretations as well as circuit splits as courts attempt to reconcile underlying policy goals with the less-than-clear language in various of the Code’s provisions.

With the current economic difficulties affecting the tech sector, a number of companies who took Future Fund investment during the pandemic have been faced with the following realities: