In brief
The Corporate Insolvency and Governance Act came into force on 26 June 2020 introducing a number of reforms aimed at providing protection to companies in financial distress, particularly as a result of the COVID19 pandemic.
However, the reforms present a number of potential problems to suppliers. Specifically, a permanent provision has been added to the Insolvency Act 1986 which:
What is it?
The UK Corporate Insolvency and Governance Act 2020 came into force on 26 June 2020. It introduced a new restructuring plan procedure amongst its package of permanent measures. The restructuring plan gives directors another tool when considering restructuring options. Directors faced with financial distress can now weigh up the new restructuring plan, or the existing “tried and tested” scheme of arrangement.
In brief
Baker McKenzie recently acted for the Foreign Representatives of Thai Airways International Public Company (Thai Airways), in successfully obtaining orders recognising the business organisation proceeding commenced by Thai Airways in Thailand as a foreign main proceeding pursuant to article 17 of the UNCITRAL Model Law on Cross‑Border Insolvency (the Model Law) which is incorporated into Australian law by the Cross‑Border Insolvency Act 2008 (Cth) (the Act).
Since Richard Branson’s Virgin Atlantic Airways Ltd’s request for Government loan was denied (see the post by my colleague, Jess), the airline has announced plans for a private-only solvent recapitalisation to "rebuild its balance sheet" and "welcome passengers back".
- Introduction
Under Hong Kong law, a company shall be deemed to be unable to pay its debts if a creditor, to whom the company is indebted of at least HKD 10,000 (around USD 1,290), has served on the company a demand requiring the company to pay and the company has not done so within three weeks.
In brief
The Insolvency, Restructuring and Dissolution Act (the IRDA) commenced on 30 July 2020. The IRDA is an omnibus legislation that consolidates Singapore's personal insolvency, corporate insolvency and debt restructuring laws into a single legislation. The IRDA will replace the Bankruptcy Act and the corporate insolvency and restructuring provisions in the Companies Act, each of which will be repealed. The IRDA also introduces new changes to the insolvency framework in Singapore.
Key changes to Singapore insolvency framework
It is an unfortunate reality that the number of insolvencies in the construction sector seems certain to rise in coming months as the economic impact of COVID-19 takes effect. In this context, the recent Supreme Court decision in Bresco Electrical Services Ltd (In Liquidation) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25 is particularly relevant.
This case concerned important questions regarding the compatibility of two statutory regimes:
The government’s temporary changes to the insolvency rules to cater for Covid-19 – in particular the new restrictions on the presentation of winding-up petitions – have been well-publicised. These have now been packaged within an Act (the Corporate Insolvency and Governance Act (“CIGA”)) which also brought in significant, permanent changes to UK insolvency law.
Earlier in March and prior to Covid-19 taking over both the world and the legal world, Mr Justice Snowden handed down his judgment in Bilta (UK) Limited (in liquidation) et ors v (1) Natwest Markets PLC and (2) Mercuria Energy Europe Trading Limited [2020] EWHC 546 (Ch) in which he found both RBS (as defined below) and RBS SEEL (also as defined below) liable for dishonest assistance and knowingly being a party to fraudulent trading. As demonstrated below, the judgment contains a number of cautionary lessons for both banks and traders alike.