The UK Government has today announced plans to introduce new legislation which will require mandatory independent scrutiny of 'pre-pack' administration sales, where connected parties, such as the insolvent company's existing directors or shareholders, are involved in the transaction.
Although the Sunbird scheme of arrangement was approved by the relevant creditors, sanction was refused by Mr. Justice Snowdon, who highlighted:
- a ‘paucity of information provided by the company as part of the scheme process’, and
- a failure to engage with creditors ‘whom the directors clearly felt were irrelevant or would be an obstacle to their plans’.
He remarked that the company’s approach 'fell a considerable distance short of what was required for a fair process'.
Despite commentators’ recent focus on the new Part 26A restructuring plan, introduced in late June by the Corporate Insolvency and Governance Act 2020, the scheme of arrangement under Part 26 of the Companies Act 2006 (“scheme”) remains a popular tool for companies to reach a compromise or arrangement with their creditors and/or its members.
I. Introduction
Complex restructurings are no stranger to colorful facts and unpredictable twists and turns. But few lead to criminal charges. Fewer still involve criminal charges against the chairman of the unsecured creditors’ committee, alleging that he abused his position to benefit himself financially.
New Look's unsecured creditors today approved a company voluntary arrangement that will amend 402 store leases to a turnover rent model, reflecting recent movements in the market towards more flexible lease obligations.
Despite opposition from many landlords, and considerable disquiet in the property industry, it is clear that tenants remain open to using the CVA process to restructure their leases, as a means to address the impact of the COVID-19 pandemic.
Background
The Finance Act 2020 received Royal Assent on 22 July 2020 and will restore HMRC as a preferential creditor on insolvency (Crown Preference) with effect from 1 December 2020.
There had been speculation that the Government would shelve or at least postpone the reintroduction of Crown Preference in the wake of Covid-19. In fact, even before the pandemic, the proposals had been widely criticised by the restructuring and insolvency industry as harmful to the UK’s corporate rescue culture.
Introduction
Shandong Chenming Paper Holdings Limited v Arjowiggins HKK 2 Limited CACV 158/2017 (date of judgment 5 August 2020)1
Introduction
What does the Corporate Insolvency and Governance Act 2020 (CIGA) do?
CIGA introduces various changes to various provisions of the Insolvency Act 1986 and the Companies Act 2006.
Some of these changes are designed to be permanent changes to the insolvency landscape (largely implementing proposals for insolvency law reform introduced in 2018) – for example, the introduction of a moratorium, a ban on termination provisions (also known as ipso facto clauses) and a new pre-insolvency rescue and restructuring regime.