Background
The collapse of Carillion in 2018 was arguably the UK's largest corporate insolvency in years, creating a lasting impact through job losses and the derailment of hundreds of public sector projects.
It is a cornerstone of English insolvency law and practice that creditors of a company in financial difficulty should share rateably (“pari passu”) in that company's assets. Put at its simplest, creditors with security should be paid before creditors with no security and unsecured creditors should share rateably between each other. Where an unconnected and unsecured creditor is paid before another creditor in the same category, that payment risks being set aside as a "preference", should the company subsequently enter liquidation or administration. But when does a preference occur?
Economic headwinds continue to make life difficult for retail and leisure operators. Wilko, of course, is the latest high profile retailer to enter administration, following on the heels of retailers such as Paperchase, Hotter Shoes and AMT Coffee. Cineworld's route out of Chapter 11 bankruptcy has involved the administration of its UK parent, although the operating companies have remained unaffected.
The Galapagos Group has secured comprehensive affirmation of its 2019 debt restructuring (the “Restructuring”) from the English High Court. This decision is a significant step towards resolution of the highly contested restructuring, and provides market participants with further clarity and certainty when it comes to implementing lender-led transactions in future.
Claimant law firms are working hard to develop routes for holding parent companies and their boards responsible for trading activities carried out through subsidiary companies. The recent decision in Aston Risk Management v Jones and others provides clarity on when a registered director of a parent company can be found to be a de facto director of an operating subsidiary.
After a lull during the pandemic, it is expected that the number of company insolvencies in Ireland will increase as financial pressures on businesses intensify following the withdrawal of temporary government supports. Recent changes to directors’ duties bring into sharp focus the actions of, and decisions taken by, company directors in the period leading up to the insolvent liquidation of a company.
Since the beginning of the 21st century and the first big wave of security enforcements in Germany, who holds the entitlement to enforce a share pledge has caused countless disputes between pledgees and insolvency administrators. This issue has now been resolved by a recently released judgment of the German Federal Supreme Court of 27 Oct 2022 (case no.: IX ZR 145/21), which has now held that pledged shares as well as pledges over certain other non-movable rights such as trademarks or patents can be enforced by the pledgee (only) and not by the administrator.
Since the beginning of the 21st century and the first big wave of security enforcements in Germany, who holds the entitlement to enforce a share pledge between pledgees and insolvency administrators has caused countless disputes. This issue has now been resolved by a recently released judgment of the German Federal Supreme Court of 27 Oct 2022 (case no.: IX ZR 145/21), which has now held that pledged shares as well as pledges over certain other non-movable rights such as trademarks or patents can be enforced by the pledgee (only) and not by the administrator.
The Supreme Court’s recent judgment in BTI 2014 LLC v Sequana SA [2022] UKSC 25 is a significant decision for the law of directors’ duties.