Introduction

In May 2022, there were a total of 1,817 company insolvencies in England and Wales. Overall company insolvencies in May 2022 were 34% higher when compared to May 2019 (pre-pandemic) and 79% higher than insolvencies recorded in May 2021.

More insolvencies means more directors being issued director questionnaires from liquidators or administrators asking them to explain their prior conduct.

This article was originally published by Travel Weekly on 21 July

The UK Government has indicated that its enthusiasm for introducing consumer protection for airline failure has waned significantly. It now looks doubtful that the recommendations of the Airline Insolvency Review will be implemented in the short term, or even at all.

¹ The Third Circuit also affirmed a judgment that awarded the senior creditor damages for the misapplication of such collateral proceeds in violation of the intercreditor agreement’s turnover provision.

On March 15, 2022, the Financial Oversight and Management Board for Puerto Rico announced that the Plan of Adjustment for the Commonwealth of Puerto Rico became effecfive, more than four years aher Puerto Rico commenced restructuring proceedings under Title III of the Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”). PROMESA is a bespoke piece of federal legislafion enacted in 2016 to address Puerto Rico’s debt crisis, and incorporates most of chapter 9 of the Bankruptcy Code.

A recently published case has shone a new light on the well-known fact of English company law – that a company has its own legal personality and is therefore separate and distinct from its members and directors.

Thus, a company shields its members and directors from most liabilities. For directors, this protective veil is pierced in certain limited circumstances such as those set out below.

On December 22, 2021, Judge Mary Walrath of the Bankruptcy Court for the District of Delaware held in In re The Hertz Corp. that redemption premiums may potentially qualify as unmatured interest, and that, to the extent that such redemption premiums are unmatured interest on unsecured debt, then creditors would only be entitled to receive the federal judgment rate, not the contractual rate of interest.

On October 29, 2021, Judge Laura Taylor Swain, the presiding judge in the Puerto Rico bankruptcy case, ruled that approximately $2 billion in intragovernmental loan claims were subordinated to bonds issued by the Puerto Rico Highway and Transportation Authority (“HTA”) pursuant to an assignment and security agreement.¹ The Court’s opinion

In Holliday v. Credit Suisse Securities USA LLC, United States District Court for the Southern District of New York ("SDNY") Judge George B. Daniels affirmed the dismissal of state law transfer avoidance claims related to a leveraged securities buyout transaction.

The fact that more businesses have not failed is the most surprising thing about the Covid-19 pandemic. However, if you look at the fashion retail sector alone, the list of some of the high profile casualties is alarming: Arcadia Group, Bonmarché, Debenhams, DW Sports, Laura Ashley, M&Co, Monsoon, Moss Bros, Oasis and Warehouse, Peacock and Jaeger, TM Lewin and Victoria’s Secret (UK Business)… with more expected.

Every five years or so, the insolvency profession seems to try and wrestle with the public outcry about the use of so-called pre-packs. In its simplest terms, this is where “Widget Manufacturing Limited” goes into administration, and the very next day “Widget Manufacturing 2021 Limited” is operating the same business and being owned by the same shareholders. The only crucial difference is that several key liabilities (usually owed to landlords) are left behind in the insolvent business.