Insolvency proceedings are typically launched by an administrator or liquidator during an insolvency process. The nature of modern insolvency litigation, including the market for assigning causes of action to third parties, has somewhat muddied the waters on how and where to commence proceedings. Two recent cases provide some valuable insight into the High Court’s approach.

On May 24, 2021, the U.S.

On June 28, 2021, in the chapter 11 cases of Paragon Offshore plc and certain of its affiliates (“Paragon” or the “Debtors”), the United States Bankruptcy Court for the District of Delaware denied the U.S. Trustee’s motion[1] to compel payment of $250,000 in statutory fees assessed against litigation trust distributions.

Rogue directors will find themselves in the firing line if and when The Rating (COVID-19) and Directors Disqualification (Dissolved Companies) Bill, which is currently making its way through parliament, comes into force. The proposed bill will enable the investigation and potential disqualification of directors of dissolved companies, and responds in particular to concerns around COVID-related fraud.

Background

On June 10, 2021, Bankruptcy Judge Mary Walrath of the District of Delaware confirmed the chapter 11 plan filed by The Hertz Corporation debtors. In the days just prior to confirmation, the debtors filed a revised plan that proposed to pay unimpaired unsecured creditors postpetition interest at the federal judgment rate. However, the plan reserved to those unsecured creditors the right to later assert entitlement to postpetition interest at higher contractual rates, while also reserving to the debtors the right to argue that no postpetition interest is payable at all.

On May 24, 2021, the Second Circuit held that a 2017 increase to the quarterly fees paid by chapter 11 debtors was unconstitutional and awarded Clinton Nurseries, Inc., Clinton Nurseries of Maryland, Inc. and Clinton Nurseries of Florida, Inc.

The past week has been frustrating for landlords, with the High Court rejecting a landlord challenge to New Look’s CVA (Lazari Properties 2 Ltd and others v New Look Retailers Ltd and others [2021] EWHC 1209 (Ch)) and days later sanctioning Virgin Active’s restructuring plan (Re Virgin Active Holdings Ltd and others [2021] EWHC 1246 (Ch)).

The government has recently announced plans to extend the moratorium on evictions for non-payment of commercial rent - first introduced in March 2020 under the Coronavirus Act 2020 - to 25 March 2022. At the same time it has introduced legislation to extend the restrictions on statutory demands and winding-up petitions under the Corporate Insolvency and Governance Act 2020 (CIGA) to 30 September 2021.

In two recent rulings, the Bankruptcy Court for the Southern District of New York confirmed that structured dismissals are viable options for debtors to exit bankruptcy notwithstanding the Supreme Court’s Jevic decision.

Following a government announcement on 16 June, the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2021 (the Regulations) have been laid before Parliament, coming into force on 22 June.