Executive Summary
Virgin Atlantic announced yesterday its plans for a recapitalisation, worth approximately £1.2 billion over the next 18 months. Support has already been secured from the majority of stakeholders.
However, to secure approval from all relevant creditors before implementation, Virgin Atlantic plans to use the new 'restructuring plan' as introduced by the Corporate Insolvency and Governance Act 2020 (CIGA), which came into force late last month.
The Corporate Insolvency and Governance Act (the ‘CIGA’), which came into force on 26 June 2020, introduces the most significant changes to English insolvency law in a generation. In this article, we explore those changes in a ‘question and answer’ format.
At a glance – what has changed?
The CIGA has introduced permanent changes to English legislation that will ensure that England & Wales remains at the forefront of the global restructuring market. These measures are:
The Government's temporary suspension of the rules surrounding wrongful trading, to apply retrospectively from 1 March 2020 for three months, will temporarily protect directors from actions for wrongful trading (and so encourage them to continue trading in circumstances where otherwise they may have feared to).
The UK Government has announced that:
It will temporarily suspend the offence of wrongful trading by directors of English companies for 3 months Amend insolvency laws to bring in more debtor friendly style processes where English companies can continue to trade while negotiating a restructuring solution with their creditors.
As ever, we await full details and legislation.
Wrongful Trading Suspension
Executive Summary
In any bankruptcy, there are inevitably winners and losers. The winners do not always do virtuous acts to win and the losers are not necessarily evil. Rather, dividing up a limited pie, the bankruptcy courts must leave some creditors short-changed. A good example is the recent 7th Circuit case involving a supplier and a lender. (hhgregg, Inc. et al. (Debtor). Whirlpool Corporation v. Wells Fargo Bank, National Association, and GACP Finance Co., LLC, 7th Circuit Court of Appeals, No. 18-3363, February 11, 2020) |
On November 12, 2019, the United States Court of Appeals for the First Circuit reversed a decision of the Bankruptcy Court for the District of Massachusetts in a case that illustrates fraudulent transfer risk for colleges and universities that receive tuition payments from a student’s insolvent parents.
Constructive Fraudulent Transfer Claims and College Tuition Payments
Secured creditors filing a UCC financing statement under Article 9 must include a description of the collateral. (UCC 9-502) UCC Article 9 adopts a “notice filing” system, under which the purpose of the filing is to provide notice of a security interest in the specified collateral. UCC Article 9 does not require a precise (e.g., serial number) description. Even so, there has been much litigation over the sufficiency of the collateral descriptions in UCC financing statements.
On May 20, 2019, the U.S. Supreme Court issued its long-awaited decision in Mission Products Holdings, Inc. v. Tempnology, LLC nka Old Cold LLC, (Case No. 17-1657, U.S. Supreme Court, May 20, 2019) ("Tempnology"). The U.S. Supreme Court decided that a trademark licensee can continue to use a trademark license even when a bankrupt trademark licensor rejects the license agreement.
On May 20, 2019, the U.S. Supreme Court issued an 8-1 ruling in the case of Mission Product Holdings, Inc. v. Tempnology, LLC. The decision resolves a circuit split, holding that a licensee may retain its right to use licensed trademarks, notwithstanding the debtor-licensor’s rejection of the contract in bankruptcy. The Supreme Court’s decision has potentially far-reaching implications.