In a significant recent judgment, the ADGM Court has clarified that it has jurisdiction to hear an action for fraudulent trading against the former directors of an onshore UAE company.
By way of background, NMC Healthcare LTD (NMC), and its various subsidiaries, were incorporated in onshore UAE. On 17 September 2020, NMC was redomiciled as an ADGM company. Shortly thereafter, on 27 September 2020, NMC was put into administration pursuant to the ADGM Insolvency Regulations 2015 and joint administrators (the Joint Administrators) appointed.
Since the pandemic, during which insolvency rates were low due to Government measures, there has been a considerable rise in insolvencies in the UK and many other jurisdictions. High interest rates have significantly increased the cost of borrowing and many companies are saddled with mountains of debt that was taken out in better times and which are now difficult to repay. In addition, high inflation and energy costs, lower consumer confidence and volatile supply chains have all contributed to making the last few years very difficult for businesses.
Across 2023, the rate of corporate insolvencies in England and Wales fluctuated but trended significantly higher than the previous year, peaking in an especially tumultuous November. Turning from statistics to the news headlines, it was striking but perhaps not surprising to see many household name businesses forced into administration.
The adage ‘there is no such thing as a free lunch’ rings true for the 831 company directors disqualified in 2023/24 for abusing the Covid financial support scheme.
ChatGPT was launched less than 18 months ago. This relatively brief period feels like a lifetime, considering the seismic changes to date which are likely only the start.
The concept of an ‘insolvent trust’ is somewhat of a paradox. A trust is not a separate legal entity in the way that companies are and, as such, cannot be insolvent in the technical sense. Trustees legally own assets in a trust for the benefit of beneficiaries.
The Superior Court of Quebec rules in favor of Export Development Canada (“EDC”) and enforces a "[unequivocal]" Waiver against the surety who signed it in the context of a loan guarantee granted to the RBC.
Relevant Facts
The Kingdom introduced its first ever bankruptcy law in 2018 which has created a foundation for a business rescue culture in Saudi Arabia. Companies undergoing financial difficulties are equipped with the tools that allow them to either trade out of a difficult period or liquidate the business in a manner which does not leave creditors out of pocket. More recently, to complement the existing insolvency regime, rules of cross-border bankruptcy proceedings came into effect on 16 December 2022 (“Rules”).
In the final statistics release of this year, the Insolvency Service confirmed that there were 2,466 registered company insolvencies in November 2023 (the December figures will be released early in 2024). Not only was this 21% higher than in the previous November, but 7% higher than the figures in October 2023.
The company insolvencies in November 2023 included:
As the ‘slow crush’ of persistently high interest rates bites, businesses of all kinds are struggling and many are reaching the point of failure, as indicated by each month’s number of creditors’ voluntary liquidations (CVLs) charting higher than the same period a year prior. The latest statistics from The Insolvency Service reveal that registered company insolvencies in October 2023 were 18% higher than in the same month in 2022.