The new Corporate Insolvency and Governance Bill will introduce new provisions to protect a company from suppliers wishing to terminate supply contracts or invoking more draconian terms when the company is entering into certain insolvency procedures, a CVA, or a new restructuring plan or moratorium (as introduced by the Bill), (each an “Insolvency Procedure”).
The purpose behind the new provisions is to maximise the possibility of a company being rescued or being able to sell its business as a going concern by helping it to trade through an Insolvency Procedure.
The landlord argued that the force majeure clause did not apply at all for three primary reasons. The Bankruptcy Court rejected each of the landlord’s arguments.
Last week the UK government introduced the Corporate Insolvency and Governance Bill in Parliament.
The main objective of the Bill is to provide businesses with the flexibility and space needed to continue to trade during this difficult time caused by the COVID-19 pandemic. That said, the provisions around the new moratorium and the new restructuring plan proposal have been under consideration for a few years.
The Bill’s measures can be split into three categories:
In In re Palladino, 942 F.3d 55 (1st Cir. 2019), the U.S. Court of Appeals for the First Circuit addressed whether a debtor receives “reasonably equivalent value” in exchange for paying his adult child’s college tuition. The Palladino court answered this question in the negative, thereby contributing to the growing circuit split regarding the avoidability of debtors’ college tuition payments for their adult children as constructively fraudulent transfers.
Background
Wrongful Trading
On 14 May 2020, the UK Government extended the temporary suspension of wrongful trading liability until 30 June 2020.
En raison de l'impact sans précédent de la pandémie de la COVID-19 ainsi que des mesures de confinement afférentes sur l'économie canadienne et la vie des citoyens canadiens, les législatures et les tribunaux accordent des assouplissements importants aux entreprises et aux particuliers, notamment eu égard à :
certains délais de dépôt et de paiement, notamment pour les déclarations d'impôt, les paiements et remises ainsi que les dépôts en matière de propriété intellectuelle; et
As a result of the unprecedented impact of the COVID-19 pandemic and its containment measures on the Canadian economy and the lives of Canadian citizens, the legislatures and courts have granted wide-ranging relief for businesses and individuals from, among other things:
certain filing and payment deadlines such as for tax filings, payments and remittances and intellectual property filings; and
Parts I and II in this series discussed certain of the statutory predicates of credit bidding and some considerations for structuring such a bid. Here in Part III, we will address some additional issues that a lender must take into account when deciding to credit bid its debt and some documentary considerations. As its name implies, the predominant form of consideration in a credit bid is often the lender’s debt. Lenders, however, cannot ignore another component of consideration often needed to consummate a transaction, cash.
In Part I of this three part series we noted the likelihood that credit bidding will be more prevalent in today’s unpredictable economic environment and discussed some of the statutory backdrop. Here, in Part II, we will discuss certain mechanics that are associated with making, and later consummating, a credit bid.
For many secured lenders, the concept of credit bidding in bankruptcy is generally understood yet infrequently explored in practice. In today’s extremely uncertain economic environment, third-party alternatives may not present themselves as M&A activity and acquisition financing have slowed significantly with the spread of COVID-19. As a result, credit bidding could gain momentum as lenders look for self-help alternatives to maximize their recoveries.