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.
The recent restructuring of the Norwegian Group by the Irish High Court helpfully clarifies the application of the Cape Town Convention in Irish restructuring. It is also an interesting case study regarding the circumstances in which the Irish courts will restructure a group of companies, which is not headquartered in Ireland.
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.
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.
Mr. O’Neill held a Buy-Out-Bond (BOB) with a pension provider. The retirement options were standard for such a product; allowing for the purchase of annuity, or investment in an Approved Retirement Fund (ARF) or Approved (Minimum) Retirement Fund (AMRF) as well as providing for taxable and non-taxable lump sum entitlements. Mr. O’Neill denied any entitlement of his official assignee (OA) in bankruptcy in exercising the retirement options provided by his pension where a Bankruptcy Payment Order (BPO) pursuant to s85 of the Bankruptcy Act 1988 (Act) had not been obtained.
The case in question is CIMB Bank Bhd v. World Fuel Services (Singapore) Pte Ltd [2021] SGCA 19. The decision was delivered on 5 March 2021 by the Singapore Court of Appeal.
The judgment addresses issues surrounding claims by a bank under assignments and other security documents over rights in and receivables under commodities supply contracts, and overturns the Singapore High Court decision in CIMB Bank Bhd v. World Fuel Services (Singapore) Pte Ltd [2020] SGHC 117.
Summary
The Department of Enterprise, Trade and Employment commenced a public consultation process on 8 February 2021, in relation to proposed legislation which will allow for a new restructuring procedure for the rescue of small companies.