The English High Court has rejected a creditor's application to bring a moratorium to an end following the monitors' decision not to terminate the moratorium.
Background
A monitor must terminate the moratorium if they 'think' that the company is unable to pay any pre-moratorium debts for which the company does not have a 'payment holiday'. Surprisingly, debts arising under an agreement involving 'financial services' are excluded from the payment holiday.
Decision
The UK High Court has excluded 'out of the money' creditors and shareholders from voting on Smile Telecoms Holdings Limited’s (Smile) restructuring plan because they did not have a genuine economic interest in the company.
Background
Under German insolvency law, a company is over-indebted when its existing assets do not fully cover its debts and there is no positive going concern prognosis. A positive going concern prognosis is assumed if the company has sufficient liquid funds available for a certain period to satisfy all liabilities at maturity and its profitability will be restored in accordance with a business plan.
Recent court decisions and legislative clarification
Over-indebtedness remains a ground for insolvency
What is likely to be proposed?
What is the likely impact of these proposals?
Following the finance minister's speech proposing the Union Budget 2022, Parliament is likely to consider further amendments to the Insolvency and Bankruptcy Code 2016 (IBC) in 2022.
In Re Edengate Homes (Butley Hall) Ltd (in liquidation) Lock v Stanley (in his capacity as liquidator) and another [2021] EWHC 2970 (Ch), the High Court has confirmed that to reverse a liquidator's assignment of claims to a third party, the claimant must satisfy a 'formidable' test.
Background
Background
When the validity of an agreed interest rate is the subject of a dispute between the parties to a loan agreement in Germany, the insolvency courts do not have jurisdiction to deal with the dispute. This is something only the civil courts can do.
Impact
If lenders provide sufficient evidence of the loan interest amount, ie usually the loan agreement, the debtor is required to prove that the interest rate contradicts public policy or is unreasonably high.
On 21 December 2021, the UK government launched the future of insolvency regulation consultation, proposing significant changes to insolvency regulation which it says 'has not kept pace with developments in the insolvency market.'