For some time, the reliance on section 553C of the Corporations Act 2001 (Cth) (Act) as a "set-off" defence to an unfair preference claim, under section 588FA of the Act, has caused much controversy in the insolvency profession. Defendants of preference claims loved it, liquidators disliked it and the courts did not provide clear direction about its applicability – until now.

For some time, the reliance on section 553C of the Corporations Act 2001 (Cth) (Act) as a "set-off" defence to an unfair preference claim, under section 588FA of the Act, has caused much controversy in the insolvency profession. Defendants of preference claims loved it, liquidators disliked it and the courts did not provide clear direction about its applicability – until now.

In August 2021 the Italian government, led by Mario Draghi, enacted a Law Decree (no. 118) to issue “urgent measures to deal with companies’ and entrepreneurs’ crises and subsequent restructuring and other urgent measures for the justice system.” On October 23, 2021, the Law Decree no. 118 was converted into Law no. 147/2021 (Law 147). The new tools introduced by Law 147 have been put in place to deal with entrepreneurs in crises that need an urgent turnaround, including during the ongoing COVID-19 emergency.

The full written judgment of Sir Alastair Norris in respect of the sanction of the Part 26A restructuring plan for Amicus Finance PLC (in administration) was belatedly handed down last week. As we reported in August (linked here), Amicus is the first company in administration to implement a Part 26A restructuring plan, which was fiercely contested by one of the creditors of the Group, Crowdstacker.

In her recent keynote speech, delivered at the 25th IBA Competition Conference on 10 September 2021, European Commission (the Commission) Executive Vice President Margrethe Vestager called for a green revolution—the replacement of a linear economy with a circular one, coupled with investments in infrastructure.

The UK Government has announced changes to the regime for winding-up petitions. With effect from 1 October 2021, some of the protections currently afforded to businesses against aggressive debt recovery action are being phased out.

The changes are intended to avoid a 'cliff edge' for debtor companies when the current measures lapse at the end of September 2021, and have a tapering effect to avoid the flood of winding-up petitions that might otherwise be expected.

What are the current restrictions (in place until 30 September 2021)?

The UK government has announced that temporary restrictions on creditor action introduced in the Corporate Insolvency and Governance Act 2020 are to be phased out. These temporary restrictions were put in place to protect businesses in financial distress, as a result of the coronavirus (COVID-19) pandemic, from being forced into insolvency.

The Federal Labour Court (Bundesarbeitsgericht – BAG) has ruled on 18 May 2021 (docket number 3 AZR 317/20) that in the case of the PSV’s assertion of claims against the insolvency administrator of an insolvent company, it is not the balance sheet interest rate used for the calculation of the pension provisions that is applicable, but the standard statutory interest rate according to section 246 German Civil Code (BGB). Only this interest rate is decisive for the calculation of the amount of claims.

Facts / Background:

Challenges in bricks-and-mortar retail are not new. However, the impact of the COVID-19 pandemic has accelerated many key consumer trends away from the high street, forcing acute (and potentially permanent) reductions in footfall as well as widespread store closures. To date in 2021, the number of stores in the UK is reported to have fallen by almost 10,000.

Even prior to the global impact of COVID-19, commercial bankruptcy filings were already on the rise. As stay-at-home orders caused many businesses to close or significantly curtail operations in 2020, financial struggles in the commercial sector mounted. Government assistance through the passage of different stimulus programs such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act (2020) and Coronavirus Response and Consolidated Appropriations Act (2021) has temporarily helped companies stave off difficult financial decisions.