Summary and implications
Almost exactly one year on from the Order* coming into force, many people remain unaware that it is no longer possible to appoint an administrative receiver over an overseas incorporated company.
Lenders and indeed insolvency practitioners should be aware that this is the case even when dealing with qualifying floating charges created before 15 September 2003 but alternative strategies, including administration, may be pursued to the same effect.
Administrative receivership
Summary and implications
The Government is proposing to give struggling companies a protected moratorium against enforcement action, to help them to negotiate a restructuring deal with their creditors.
The moratorium would be available to all companies which are preparing a CVA or scheme of arrangement. At present, a moratorium is only available to small companies* who are proposing a CVA.
David Vladeck, Director of the FTC’s Bureau of Consumer Protection, recently sent a letter to creditors of XY Magazine, warning that the creditors’ acquisition of personal information about the debtor’s subscribers and readers in contravention of the debtor’s privacy promises could violate the Federal Trade Commission Act (“FTC Act”).
If an administration order is made and a pending winding-up petition is subsequently dismissed, the costs of that petition are payable as an expense of the administration.1
A Mississippi Bankruptcy Court recently addressed several employer defenses to liability under the Worker Adjustment and Retraining Notification Act (“WARN Act”), which is noteworthy in the context of the current economy. In re FF Acquisition Corp. d/b/a Flexible Flyer, 423 B.R. 502 (Bankr. N.D. Miss. January 20, 2010).
In our September 2009 Pensions update we reported on proposals to make changes to the employer debt regime aimed at assisting corporate restructurings. The final regulations have now been published and come into force on 6 April 2010. Under these provisions, where there is a corporate restructuring and one employer’s assets and pension liabilities are transferred to another, then as long as the prescribed steps (set out below) are followed, no statutory employer debt will arise. Employers relying on an easement will not be expected to seek clearance from the Pensions Regulator.
The Government has announced that it will shortly begin a consultation on important new measures designed to boost confidence in the ‘pre-pack’ administration procedure.
The PPF policy statement can be found here
Following its November 2009 consultation, the PPF has published a statement confirming its policy on measuring insolvency risk for the 2011/12 levy. Schemes and employers should act quickly before the 30 and 31 March 2010 deadlines.
The policy statement confirms that for the 2011/12 levy year, the PPF will adopt new policies, including:
In a recent Hunton & Williams client alert, we discussed some of the issues relating to the termination of credit default swap agreements that were pending before the Lehman bankruptcy court, including the enforceability of so-called “flip clauses.” (“Swap Termination and the Subordination of Termination Payments in the Lehman Bankruptcy,” December 2009.) Recently, the court ruled for Lehman on many of these issues. The court’s ruling (Lehman Brothers Special Financing Inc.
In parallel with the decision to allow the UK government to intervene in the liquidation of Bradford & Bingley, the European Commission has approved measures taken to facilitate the restructuring of Dunfermline Building Society. After the business encountered major financial difficulties, the UK Government intervened to facilitate an approved restructuring plan under which the building society’s impaired assets were split from its profitable business and put into administration.