This is the second in a series of articles on how the changes introduced by the 2024 JCT (Joint Contracts Tribunal) contracts will impact the practical administration of the JCT contractual mechanisms.

In this article, we look specifically at the insolvency related provisions in the 2024 Design and Build (D&B) contract and the 2024 Intermediate Building Contract with Contractor’s design (ICD) contract. We address the updates to the definition of insolvency, the impact of those changes for Employers and Contractors and the related knock-on impact to sub-contracts.

In a recent judgment¹, the High Court determined (contrary to the arguments of the affected secured creditor) that a debenture created a floating charge rather than a fixed charge over certain internet protocol (IP) addresses. Whilst elements of the decision are inevitably fact-specific, some broader lessons and reminders can be taken from the judgment which will be of general relevance to lenders when taking security.

The long-awaited amendment "H" of the Slovenian Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act (the "Act") entered into force on 1 November 2023. The new provisions complete the transposition of Directive 2019/1023,[1] introducing three crucial sets of changes to the Slovenian insolvency and restructuring legislation.

In our practice, we have found that the most common reason for distressed companies to initiate reorganisation measures is a severe liquidity squeeze.

Driven by regulation, banks are increasingly reluctant to grant senior bridge financings, leading companies to resort to trade credits of major suppliers, such as deferrals or generous payment agreements. But these trade creditors are often unaware of significant third-party liability risks.

Shareholders of Austrian limited liability companies ("GmbH") often stipulate the right to purchase the shares of co-shareholders in certain events. These "share purchase rights" (Aufgriffsrechte) entitle the remaining shareholders to acquire the share of a shareholder when a contractually defined event (Aufgriffsfälle), like insolvency or the death of a shareholder, occurs. Often these rights are laid down in articles of association or a separate shareholders' agreement (Syndikatsvertrag). They are generally qualified as option rights.

After a delay of more than a year, an Act on Preventive Restructuring (the "Act") implementing the EU directive on preventive restructuring frameworks finally became effective in the Czech Republic on 23 September 2023. The long-awaited Act introduced a brand-new legal tool enabling viable enterprises in temporary financial distress to achieve restructuring outside insolvency proceedings. It is a voluntary and flexible process requiring cooperation with creditors, but not necessarily with all of them.

Who can use it?

Regulations on Foreign Direct Investment (FDI) are becoming increasingly influential, especially in M&A transactions. It is essential to consider how these regulations will affect foreign creditors, particularly those from non-EU countries. The Slovak FDI Act will have numerous implications for financing and security arrangements.

Security package

Introduction

Independent schools have not been immune from financial stress in recent years. Prior to the pandemic a combination of increasing staff costs, greater competition and the need for continual investment in technology and premises was already posing challenges for a number of institutions. This was exacerbated by the unique pressures of COVID, which saw income squeezed as a result of enforced school closures and reduced pupil numbers.

In a judgment that will be welcomed by insolvency professionals, the Supreme Court has today confirmed that administrators cannot be personally criminally liable for failing to notify the Secretary of State about plans for collective redundancies. This judgment follows an appeal by Robert Palmer against a finding that he was criminally liable for his failure to submit form HR1 in his capacity as the joint administrator of West Coast Capital (USC) Limited (USC).

What is the obligation?

This judgment reinforces the Court’s power to order a judgment debtor to draw down their pension for the benefit of the creditors as recently seen in Bacci v Green.

Summary

The recent judgment handed down by the High Court in Manolete v White [2023] EWHC 567 (Ch) reinforces the Court’s power to order a judgment debtor to exercise a right to draw down on their pension for the benefit of creditors as recently seen in Bacci v Green.

The Facts