In recent years, there has been an increased interest in obtaining third-party funding to commence legal proceedings. The insolvency sector in particular has seen an increase in applications to court for approval of third-party funding agreements. In this article, we discuss how an insolvent entity may seek approval from the court for third-party funding to pursue legitimate claims.
Third-party funding an important resource for insolvent companies
Preventive Restructuring
Intro
The UK insolvency regime has changed. Our earlier alert set out a brief overview of the changes. This is note provides more detail and flags some practical steps that the suppliers of goods and services may wish to consider.
In a nutshell
Even before the advent of Covid-19, insolvency-related D&O claims already made up a large part of the management risk landscape.
Corporate insolvencies are on the rise. 2019 saw the highest level of underlying insolvencies since 2013, with the retail, hospitality and construction industries particularly affected. As the ongoing uncertainty of the pandemic further increases the risk that companies will run into financial difficulties, insolvency can only continue to make up a large source of directors’ and officers’ (D&O) claims.
On 19 June 2020, the Ukrainian Parliament adopted law (draft law No. 2284) aimed at introducing sweeping new changes to regulation of financial instruments (the Law). The Law has also paved the way for a wide range of new financial instruments such as derivatives, green bonds, loan notes, and other structured finance products.
On 19 June 2020, the Ukrainian Parliament adopted law (draft law No. 2284) aimed at introducing sweeping new changes to regulation of financial instruments (the Law). The Law has also paved the way for a wide range of new financial instruments such as derivatives, green bonds, loan notes, and other structured finance products.
The rapidly changing impact of COVID-19 on companies and the wider economy presents directors with the unenviable task of balancing the immediate need to secure the survival of their company against the longer-term implications for their stakeholders. In March, the UK Government announced that wrongful trading measures would be temporarily suspended to ease this pressure. The suspension measures are included in the Corporate Insolvency and Governance Act 2020, which introduces both temporary measures, such as this, and permanent and significant changes to UK insolvency law.
The Corporate Insolvency and Governance Act 2020 makes the most significant changes to UK insolvency law in a generation. It had a rapid passage through the UK parliamentary process, making its way from first publication on 20 May 2020 to Royal assent on 25 June 2020 in just over five weeks. This article provides a brief overview of the key measures introduced by the Act (both permanent and temporary) and summarises the amendments made to the Act during its progress through parliament. It also provides links to our further, more in-depth, analysis.
The Corporate Insolvency and Governance Act 2020 introduces a range of changes to UK insolvency law of a magnitude not seen since the reforms of the Enterprise Act 2002. One of the reforms included in the Act is a wide ranging prohibition on the operation of termination clauses in contracts for the supply of goods and/or services where the counterparty enters a relevant insolvency process.
What do the provisions do?
Under the new provisions, suppliers will be prevented from:
The new UK Restructuring Plan
The Corporate Insolvency and Governance Act, which received Royal Assent on 25 June 2020, contains a range of significant reforms, not least of which is the introduction of a new Restructuring Plan process. Together with the sweeping changes that the Act has in its sights, the Restructuring Plan and associated changes are aimed at improving the tools for companies to be effectively and efficiently rescued.
Key takeaways