In a landmark bankruptcy case judgment issued on 10 October 2021 the Dubai Court of First Instance has held the directors and managers of an insolvent Dubai-based PJSC to be personally liable to pay the outstanding debts of the previously listed company (now in liquidation) pursuant to the UAE Bankruptcy Law. This decision represents a very significant milestone in the UAE insolvency landscape since the enactment of the Bankruptcy Law in late 2016, being the first known instance of a case where such personal liability has been ordered.

The consequent distress in the market is evident with 9 supplier insolvencies in the last few weeks alone, including Avro Energy, Utility Point and People’s Energy.

Today, 1 October 2021, is important as Ofgem is due to increase tariff caps from that date. This is also the date when the restrictions on petitioning for the winding up of companies on the basis of insolvency will be eased.

Legal landscape – energy regulations

In distressed situations, there are a number of issues to navigate, including:

There have been two recent changes to the insolvency laws in England and Wales relating to winding up petitions1 and Part 1A moratoriums.

Winding up petitions – Relaxation of restrictions

In SolarReserve CSP Holdings, LLC v. Tonopah Solar Energy, LLC, C.A. No. 78, 2021 (Del. Aug. 9, 2021), the Delaware Supreme Court recently dismissed a books-and-records appeal as moot and vacated a judgment issued by the Court of Chancery after appellee Tonopah Solar Energy, LLC (Tonopah) emerged from a Chapter 11 bankruptcy proceeding as a new limited liability company operating under a new limited liability company agreement.

On 9 June 2021, the Dubai Court of Cassation adopting a restrictive interpretation of the UAE Federal Law No 11 of 1992 and its amendments (the Civil Procedure Code) has added a requirement for the success of a debt recovery claim through a payment order application to the summary judge: there must be written evidence that the debt was either accepted or acknowledged by the debtor. This article provides an overview of the legal requirements of the payment order claim and what this new requirement of the Dubai Court of Cassation means for creditors in Dubai.

Following the landmark decision by Justice Trower in Re DeepOcean 1 UK Ltd,¹ Justice Snowden delivered another important judgment on the use of cross-class cram downs as he sanctioned the Virgin Active² restructuring plans.

The High Court has given its blessing, in two recent cases, to ever more creative company restructuring – which will be a relief to occupational tenants as they look to emerge from COVID, but will likely give landlords cause for concern.

The COVID-19 pandemic is also keeping legislators on their toes, who are continuing to try to mitigate the impact of the pandemic on the economy. The focus was initially on the temporary suspension of the obligation to file for insolvency by the COVID-19 Insolvency Suspension Act (COVInsAG). Following on from this, with the Act on the Further Development of Restructuring and Insolvency Law (SanInsFoG), which came into force on 1 January 2021, the legislator has further modified obligations of conduct and, correspondingly, the liability of managing directors in the crisis of the company.

In addition to the extension to the commercial eviction ban until 30 June 2021, the UK Government has now also extended the moratorium on commencing winding-up proceedings until 30 June 2021.

You may view the regulation from the UK Government at gov.uk.

On 16 March 2021, the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, or BaFin) declared Greensill Bank AG (Greensill) to be an indemnification case, meaning that German deposit insurance institutions can compensate the bank’s creditors.

BaFin had previously filed an insolvency petition against Greensill, and the insolvency court in Bremen opened insolvency proceedings on 16 March 2021. It appointed an insolvency administrator who is now responsible for managing Greensill’s affairs.