Following the posting of the article I co-wrote with Morayo Fagborun-Bennett on the Recovery of Commercial and Residential Rent Arrears, there have been a couple of developments of note.

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.

This article follows the #HardwickeBrew on 28th May 2020 which looked at the Corporate Insolvency & Governance Bill. If you would like to take part in future #HardwickeBrews, please sign up via our Events page.

Introduction

1. This note reviews the provisions relating to the moratorium procedure for Great Britain under the draft Corporate Insolvency and Governance Bill (“CIGB”).

CIGB

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.

Re Debenhams Retail Limited (In Administration) [2020] EWCA Civ. 600

In these unprecedented times there has been much discussion and focus in the property community of the effect of tenants unable to operate their businesses and the risks of widescale insolvencies.

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.