What new measures have been introduced by the UK government to provide further support to commercial tenants struggling to pay rent?
Speed read
The High Court has recently ruled that the agreement between the liquidator of a company and the parent of that company, which contemplated the transfer of all of the assets of the company to the parent gave rise to a trust arrangement on the facts of the case. As a consequence of that trust arrangement, lands which were inadvertently not transferred by the liquidator in the course of the liquidation were deemed not to have vested in the State when the company was dissolved, as would otherwise have been the case under the State Property Act, 1954.
The COVID-19 global crisis has brought cross border insolvencies into focus as companies consider the challenges that may arise where assets are situated across a number of jurisdictions and where an insolvency event may occur. Drawing on our experience of cross border restructurings, and the issues that should be considered, we look at the key issues to consider when assessing if you should implement a restructuring where an Irish company is involved and which restructuring tool to avail of.
Directors are facing difficult decisions in the current climate but, while the impact of COVID-19 will continue to be felt, it does not follow that companies should be forced out of business. Our publication 'Saving viable businesses – a look at restructuring options in the current environment' serves as reminder of rescue procedures available under Irish law.
The Government's temporary suspension of the rules surrounding wrongful trading, to apply retrospectively from 1 March 2020 for three months, will temporarily protect directors from actions for wrongful trading (and so encourage them to continue trading in circumstances where otherwise they may have feared to).
The UK Government has announced that:
It will temporarily suspend the offence of wrongful trading by directors of English companies for 3 months Amend insolvency laws to bring in more debtor friendly style processes where English companies can continue to trade while negotiating a restructuring solution with their creditors.
As ever, we await full details and legislation.
Wrongful Trading Suspension
Businesses in all sectors are facing very challenging times arising from the outset of, and reaction to, the Coronavirus (COVID-19). With the challenges in some instances being unprecedented, directors of affected companies need to be cognisant of their duties especially around decisions they are looking at making to get through current difficulties
On November 12, 2019, the United States Court of Appeals for the First Circuit reversed a decision of the Bankruptcy Court for the District of Massachusetts in a case that illustrates fraudulent transfer risk for colleges and universities that receive tuition payments from a student’s insolvent parents.
Constructive Fraudulent Transfer Claims and College Tuition Payments
Overview
The recent approval by the Irish High Court of a scheme of arrangement that restructured US$1.65bn of liabilities of Ballantyne Re plc (Ballantyne) confirms Dublin as one of the most effective restructuring venues in the EU. The detailed decision of Justice Barniville (available here) offers significant precedential value and is a clear endorsement that Irish schemes can be used to implement complex cross border restructurings. The Irish statute governing schemes is very similar to that of England and Wales.
Essence of the Ballantyne scheme:
On May 20, 2019, the U.S. Supreme Court issued an 8-1 ruling in the case of Mission Product Holdings, Inc. v. Tempnology, LLC. The decision resolves a circuit split, holding that a licensee may retain its right to use licensed trademarks, notwithstanding the debtor-licensor’s rejection of the contract in bankruptcy. The Supreme Court’s decision has potentially far-reaching implications.