“Government gives businesses much-needed breathing space with extension of insolvency measures”
The UK government has announced an extension of the following temporary insolvency measures introduced by Corporate Insolvency and Governance Act (CIGA), 2020.
Highlights include:
Cory Bebb looks at a recent unsuccessful attempt by Administrators to block an £18.6M misfeasance claim by contributories.
“All cats are animals, but all animals are not cats” - former administrators’ attempt to stop £18.6M misfeasance claim based upon their CVA release clause, fails in a provisional ruling: Re Rhino Enterprise Properties Limited [2020] EWHC 2370 (Ch)
The case of Re Lehman Brothers Europe Ltd (In Administration)[2020] EWHC 1369 (Ch) in May 2020 highlighted the importance of ensuring that creditors or the creditors committee approve the discharge of Administrators’ liability pursuant to paragraph 98 of Schedule B1 to the Insolvency Act 1986.
As we mentioned in a previous post, the COVID-19 pandemic has generated a wave of bankruptcies that we expect to continue into 2021. Companies entering 2020 in a strong financial position may now need to quickly shed distressed assets and generate cash. A Chapter 11 reorganization is likely to be too long and burdensome for companies in this position.
The Second Circuit affirmed the judgment of lower courts upholding the application of certain swap agreement safe harbors in section 560 of the U.S. Bankruptcy Code (the Bankruptcy Code).
publication of The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020. If approved by Parliament the scheme will come into force on 4 May 2021.
The increasing number of high-profile bankruptcies across a number of commercial hubs has brought renewed focus on important questions of jurisdiction arising out of the tension between local insolvency regimes on the one hand, and parties’ arbitration agreements on the other.
Having successfully obtained a public interest winding-up order in Re PAG Management Services Limited [2015] BCC 720 which operated a business rates avoidance scheme using Members’ Voluntary Liquidations, the Secretary of State for Business, Energy and Industrial Strategy unsuccessfully tackled its successor in the Court of Appeal.
The scheme in this case (Scheme 3) was a variant upon two earlier schemes, Scheme 2 being no longer in operation following the public interest winding-up of PAG Management Services Limited.
Since the end of the first quarter of 2020, bankruptcy professionals have been planning for a substantial increase in business bankruptcies. The newest statistics tell us that the wait is over. These bankruptcy filings follow the sustained economic contraction rooted in the COVID pandemic. But it would be too simplistic to say that COVID is the sole cause of this trend. Most of the businesses that have filed faced other challenges, such as heavy debt burdens, deteriorating markets or strategic missteps.
The number of so-called mega-bankruptcies filed during the first half of the year tells only part of the story. The pain is not just at the top, but spreads across multiple sectors of the economy. Overall, business bankruptcy filings are 30% higher than they have been at any time during the last 5 years. And, with attempts to re-start the economy already sputtering, the news during the second half could be worse.