In Sian Participation Corporation (In Liquidation) v Halimeda International Ltd [2024] UKPC 16, the Privy Council considered an appeal from the Court of Appeal of the Eastern Caribbean Supreme Court (BVI) as to whether a company should be wound up where the debt on which the winding up application is based is subject to an arbitration agreement and is said to be disputed and/or subject to a cross-claim.

Building on emerging trends, 2024 has seen a continued rise in the use of equity-linked debtor-in-possession (DIP) financing in Chapter 11 cases.

Recent examples from WeWork and Enviva illustrate how stakeholders are leveraging this innovative tool to drive broader reorganization strategies and outcomes rather than as a mechanism solely providing interim financing to fund a debtor’s operations during the pendency of its bankruptcy case.

WeWork

The collapse of UK retailer British Home Stores ("BHS") in 2016 remains one of the most high-profile corporate insolvencies of recent times. It went from being a household name across the UK, with over 11,000 employees, to having reported debts of £1.3 billion, including a pension deficit of nearly £600 million. The group's demise saw the closure of some 164 stores nationwide and significant job losses.

On July 2, 2024, the Court of Appeal for British Columbia (the “Court”) released its highly anticipated decision in British Columbia v. Peakhill Capital Inc., 2024 BCCA 246 (“Peakhill”) concerning the use of reverse vesting orders (“RVOs”) to effect sale transactions structured to avoid provincial property transfer taxes for the benefit of creditors.

Seven years after the British Home Stores Group Limited, a well known high street retailer, and its operating subsidiaries entered liquidation, the High Court has found two former directors liable for wrongful trading and misfeasance.

Background

Many litigators and corporate lawyers view the practice of representing a large shareholder and the company in which it is invested as common practice. In many instances, no conflict of interest will ever materialize such that the shareholder and the company require separate representation. However, in a recent opinion rendered by the United States Bankruptcy Court, Eastern District of Virginia (the “Court”), a large international law firm (the “Firm”) was disqualified from representing Enviva Inc.

The High Court has found that a borrower's debenture granted to a lender in respect of certain internet protocol (IP) addresses was a floating charge.

In a case brought by the liquidators, the High Court found two former directors liable for wrongful trading; that is, continuing to trade when they knew or should have known that there was no reasonable prospect of avoiding insolvency (section 214 of the Insolvency Act 1986).

Building on emerging trends, 2024 has seen a continued rise in the use of equity-linked debtor-in-possession (DIP) financing in Chapter 11 cases.

Recent examples from WeWork and Enviva illustrate how stakeholders are leveraging this innovative tool to drive broader reorganization strategies and outcomes rather than as a mechanism solely providing interim financing to fund a debtor’s operations during the pendency of its bankruptcy case.

WeWork

On May 31, 2024, the chief judge of the U.S. Bankruptcy Court for the Southern District of New York (SDNY) entered General Order M-634, adopting guidelines for combining the processes for Chapter 11 plan confirmation under Section 1129 of the Bankruptcy Code and disclosure statement approval under Section 1125 of the Bankruptcy Code.