The case concerning the Game group of companies' administration has now been played out in the Court of Appeal and the eagerly anticipated judgment has been handed down.
The issue at stake concerned a landlord's ability to recover rent as an expense of administration (and therefore payable before other creditors) where such rent is payable in advance but where the tenant's administration occurs immediately before a quarter day's rent falling due.
When structuring a complex debt financing, financiers need to consider whether unsecured and structurally subordinated “mezzanine” debt ought to be replaced in the capital hierarchy with secured second lien credit. The relatively lower financing cost for second lien credit is based on the assumption that the second lien lenders might obtain some equity value from the liens on the residual collateral which would not otherwise be available with such “mezzanine” debt.
Ruling description
In its judgment of January 15, 2014, the Provincial Administrative Court (WSA) in Warsaw (case no. III SA/Wa 1928/13) ruled that a bankruptcy receiver was not required to correct input tax under the procedure set forth in Art. 89b (1) of the VAT Act (in the version which took effect on January 1, 2013) if the creditor cannot correct output tax under the “bad debt relief” procedure due to the debtor being bankrupt.
Introduction
'Frivolous or vexatious' test
'Strong prima facie case' test
Applying the same test for leave
Receiver's appointment and discharge orders
Comment
On 1 August 2013, an act amending the Business Continuity Act ("BCA") of 31 January 2009 entered into force.
The new act tackles the most common types of abuse under the Business Continuity Act and aims to reduce the number of bankruptcies following reorganisation governed by the BCA. The basic principles of the Business Continuity Act remain unchanged, however.
English schemes of arrangement (Schemes) have become a useful and established procedure for restructuring the debts of foreign companies incurred under English law finance documents. For an overview of why they are useful and how they work, see our July 2011 article "Financial restructurings of foreign companies through English schemes of arrangement".
EIOPA has launched a Q&A tool to ensure the consistent application of the guidelines it publishes, including those aimed at preparing for Solvency 2 implementation. (Source: EIOPA Guidelines Q&A)
FRC has issued guidance to banks' directors on financial reporting of solvency and liquidity risks, and the definition of going concern, in the context of post-crisis reforms and central bank and government support. (Source: Guidance for Directors of Banks)
Directors and officers beware. Former directors and officers of bankrupt companies can now be found liable to pay clean-up costs for contaminated sites in Ontario, even if the contamination occurred before their tenure.