On 4th May 2021 the government introduced some new legislation, which seeks to help households cope with debt, entitled The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England & Wales) Regulations 2020.
The Regulations apply to debtors who reside or are domiciled in England and Wales, and largely to personal debts. Some business debts are eligible but not if they relate solely to the business and the debtor is VAT registered, or if the debtor is in partnership with someone else.
Re Bitumina Industries Ltd (in administration); Manning and another v Neste AB and another [2022].
This was an application by joint administrators for directions on the validity of a floating charge granted to a connected party at a 'relevant time' and seemingly invalid under s245 of the Insolvency Act 1986 (the Act).
Background
While an insolvency process is not always welcomed with open arms, in fraud cases it can play a key role in uncovering frauds that might otherwise have remained concealed and may result in recoveries for victims. This is because an insolvency process paves the way for an independent investigation into the company's affairs and the directors' conduct to be carried out by an insolvency practitioner (IP).
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Decision
Key takeaways
The recent High Court decision in Re Nostrum Oil & Gas plc [2022] EWHC 2249 (Ch) considers a scheme of arrangement where creditors are the target of Russian sanctions.
What we've been up to?
In the six months since our last full newsletter, the UK has witnessed some monumental events, the most significant of course being the death of HM Queen Elizabeth II – followed by no less than three different occupants at Nos. 10 & 11 Downing Street, a UK record summer temperature of 40.3C, inflation hitting a 41 year high, startling increases in energy & food prices (exacerbated by the ongoing war in Ukraine) and, as of this month, the UK economy officially falling into recession.
Germany is experiencing a severe energy crisis due to the Ukraine conflict and its effect on the supply of natural gas. Energy intensive companies have seen a dramatic increase in energy costs, irrecoverable from consumers, causing grave financial distress in various German industries. As a result, the German government plans to modify the German Insolvency Code (InsO) on a temporary basis.
Background
Summary
The recent case of PSV 1982 Limited v Langdon [2022] has clarified what is a ‘relevant debt’ of a company which uses a ‘prohibited name’ and for which a director or person who manages that company can be personally liable for.
Who will be interested in this article?
Since 2021, soaring wholesale energy costs have caused concern for businesses already battling a difficult economic climate with wider inflationary pressures, such as higher interest rates.
The government's mini-budget on 23 September 2022 cancelled the planned increase in the corporate tax rate (the proposed increase from 19% to 25%). This will assist those companies which are profit-making, but without support to reduce the cost base, this provides limited relief to others.
The Supreme Court has unanimously dismissed the appeal of the decision in BTI –v- Sequana.
At a time when many companies are facing financial difficulties and directors are considering their legal duties, this long-awaited judgment has confirmed that directors have a 'creditor interest duty' when a company is insolvent or bordering on insolvency or an insolvent liquidation or administration is probable.
Background