Tata Steel Limited (Tata) has been intending to end their British operations for some time. As yet, it has been unable to do so as its subsidiary, Tata Steel UK (TSUK), is the principal employer of one of the UK’s largest defined benefit (DB) schemes. The obligations and liabilities under the British Steel Pension Scheme (BSPS) have been deemed by prospective buyers as too great to take on with the Scheme currently running at a deficit of approximately £700 million.

The UK Supreme Court today delivered an important decision on the meaning of the so-called 'balance sheet insolvency test' in s.123(2) of the Insolvency Act 1986 (UK) (BNY Corporate Trustee Services Limited v Eurosail 2007-3BL PLC [2013] UKSC 28 ("Eurosail")).

Introduction

The U.S. Court of Appeals for the Third Circuit held, in a split decision, on March 22, 2010, that secured creditors do not have a statutory right to credit bid1 their debt at an asset sale conducted under a “cramdown” reorganization plan. In re Philadelphia Newspapers, LLC, et al., --- F.3d ----, 2010 WL 1006647 (3d Cir. March 22, 2010) (2-1).

In the current economic climate, landlords are having to deal more frequently with tenants who are in administration. Where the administrators of the tenant are using the property for the purposes of the administration, the moratorium on forfeiture and irritancy proceedings that applies in administrations means that the landlords are unlikely to be able to recover the property in order to relet it.

The U.S. Court of Appeals for the Tenth Circuit held on Nov. 3, 2009, that a district court had improperly dismissed, on mootness grounds, an appeal from a bankruptcy court’s order confirming a reorganization plan. According to the Tenth Circuit, the appeal was reviewable because reversal of the plan confirmation order (1) would not unduly affect innocent third parties, and (2) would not undo any complex transactions.

On July 14, 2009, the Joint Administrators of Lehman Brothers International (Europe) ("LBIE"), made an application to the High Court in London with respect to a Scheme of Arrangement (the "Scheme") (the UK administration’s analogue to a Chapter 11 plan of reorganization) designed to provide procedures to be used by LBIE for the purpose of returning so-called “trust property” held by LBIE to certain of its customers (“Creditors”). Among the primary purposes of the Scheme is the desire to avoid the need for a case-by-case resolution of the claims made by LBIE's Creditors.

This recent case in the Employment Appeal Tribunal (EAT) is one of the first to examine how the insolvency provisions in the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) should apply and, in particular, the circumstances in which employment liabilities passed under TUPE to the buyer of the assets of an insolvent company.

Facts

This case involved a "pre-pack" administration.

The United States Bankruptcy Court for the Southern District of New York overseeing the Lehman Brothers (“LBI“) case under the Securities Investor Protection Act (“SIPA“) entered an order on Nov. 7, 2008 (the “Claims Bar Date Order“) establishing the following deadlines for the filing of claims against LBI:

The recent downturn in the economy is undoubtedly having an adverse effect on the cash flows of a large number of businesses in the UK. Businesses are keeping a much closer eye on outgoings and expenses, and may be looking to ease financial pressure by making payments due to creditors as late as possible.

For a business operating from leased premises, quarterly rental payments are likely to be one of the biggest outgoings. The longer the rental payment remains in the tenant's bank account, the more interest they will accrue and the more likely that cash flow issues will be eased.