The Corporate Insolvency and Governance Act 2020 (CIGA) came into effect on 26 June 2020. Whilst the Act makes a number of changes to the insolvency regime (which are detailed in our Restructuring and Insolvency team's previous article), the focus of this section of the article is the potential effects of the CIGA from a pensions perspective.
Key message
On 26 June 2020, the Corporate Insolvency and Governance Act 2020 (the "CIGA") came into effect. As anticipated in our previous article the CIGA was fast-tracked through Parliament and some amendments were ultimately made prior to it becoming law.
Everyone, including the least empathic in our society (aka, lawyers), knows that we should seek to uphold the golden rule and “do unto others…” with respect to family, friends, and acquaintances, but does this also apply in the corporate world? Apparently so, as a Delaware bankruptcy court just ruled that preferred shareholders with a bankruptcy-filing blocking right (also known as a “Golden Share”) must consider the effects on other shareholders and all other creditors when exercising such right.
Analyzing the inner workings of the elements required for the securities contract “safe harbor” protection under Section 546(e) of the Bankruptcy Code, the Bankruptcy Court for the SDNY dismissed a complaint seeking to recover approximately US$1 billion in allegedly fraudulent transfers brought against various transferees as part of the Boston Generating Chapter 11 case.
Re Akkurate Ltd (in Liquidation) [2020] EWHC 1433 (Ch)
Back in November we reported on the case of Wallace v Wallace [2019] EWHC 2503 (Ch), where the Court grappled with the diverging authorities on the issue of whether section 236 of the Insolvency Act 1986 has extra-territorial effect.
The issue recently came back before the Court in Re Akkurate Ltd (in Liquidation) [2020] EWHC 1433 (Ch).
What did the Court decide?
No, says the Delaware Bankruptcy Court in In re Maxus Energy Corp. In Maxus, the defendant, Vista Analytical Laboratory, Inc. (“Vista” or the “Defendant”), a designated critical vendor, sought summary judgement dismissing the preference complaint. The Court denied summary judgement finding that the critical vendor status did not per se insulate Vista from preference actions.
Background
On 2 June 2020, Mr Justice Morgan handed down his judgment in the case of Re: A Company [2020] EWHC 1406 (Ch) in which a High Street retailer (whose identity is not disclosed) applied to restrain the presentation of a winding-up petition based on the provisions of the yet-to-be-enacted Corporate Insolvency and Governance Bill 2020 (the “Bill”).
It is well established that by filing a proof of claim in bankruptcy, a creditor submits itself to the equitable jurisdiction of the bankruptcy court and waives any right it would otherwise have to a jury trial with respect to any issue that “bears directly on the allowance of its claim.” Such a waiver normally applies in fraudulent transfer actions, since under Section 502(d) of the Bankruptcy Code the court must disallow a claim of any entity that received an avoidable transfer.
One of the pleasures of life is re-encountering old friends, catching up on what’s happened while your lives have gone their separate ways, reminiscing about the good old days and reconnecting. It comes back so fast, it’s like you never were apart.
Me and the Liquidating Trust had just such an experience the other day.
The decision of Mr Justice Morgan in A Company (Injunction To Restrain Presentation of Petition) [2020] EWHC 1406 (Ch) (judgment anonymised) which was handed down on 2 June 2020 will be of interest to tenants and landlords alike in the current climate. The judgment, which follows the decision in Travelodge Ltd v Prime Aesthetics Ltd [2020] EWHC 1217 (Ch) will be of huge precedent value to commercial tenants that have been impacted by coronavirus and have been unable to meet their rent obligations as a result.