Introduction
Section 239(5) of the Insolvency Act 1986 (the “1986 Act”) limits the jurisdiction to reverse a preference to situations where “the company which gave the preference was influenced in deciding to give it by a desire to produce” the prohibited result. This involves a subjective enquiry which turns on the relevant actor’s state of mind.
To secure an order for the #winding-up of a Quasi-Partnership company on the Just& Equitable ground, is it necessary only to show that mutual trust and confidence between the shareholders/quasi-partners has broken down? Hardwicke investigates the recent case of Badyal v Badyal & Ors [2019] EWCA Civ 1644
Background
2018 was seen by many as the ‘year of the CVA’ and the year of the so -called ‘Retail CVA’ in particular. Such CVAs have been used in an attempt by companies operating in the retail and casual dining sector with burdensome leases to reduce the cost of their premises whilst continuing to trade.
2019 was widely expected to be the year in which there was a challenge by a landlord under s.6 of the Insolvency Act 1986 (‘the Act’) to the use of CVAs to force a rent reduction, without comparable cuts to other creditors and so it has proved.
The recent case of Sell Your Car With Us Ltd v Anil Sareen will be of interest to practitioners in Corporate Insolvency as it provides a useful reminder that there is no strict rule that the winding up procedure is inapt for mere debt collection.
The Facts:
The creditor (“AS”) had engaged the debtor company (“SYC”) to sell his Maserati Levante sports car and on completion of the sale to deposit the proceeds in his bank account. Communications were agreed to be conducted by email.
In complex long-term charters for vessels or finance leases in respect of vessels under the U.S. Uniform Commercial Code (“UCC”) and its Article 2A (governing commercial matters relating to finance leases) and under other similar law, a charterer’s or lessor’s damages under a charter or lease— both generally upon a payment default or in the event of a casualty—are often liquidated in stipulated loss value (“SLV”) provisions. These provisions ensure that the lessor/charterer gets the benefit of its bargain.
The Insolvency Working Group of the United Nations Commission on International Trade Law (“UNCITRAL”)1 has been busy this past year, working on three new model laws and developing work on at least two possible future projects.2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the “CBI Model Law”) in 1997, which has since been adopted in 46 countries and is under consideration in several others. In 2005, the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code.
The Supreme Court recently limited the ability of debtors to use contract rejection in bankruptcy to shed unwanted trademark licensees. But the Court acknowledged that the result could change if the trademark licensing agreement had different termination rights. Going forward, parties entering into trademark licensing agreements will need to consider this decision carefully as they negotiate termination rights in the event of a bankruptcy by the licensor.
With the May 1 order, the Commission reaffirms its view that it has concurrent jurisdiction over debtors’ efforts to reject their FERC-jurisdictional contracts in bankruptcy. Further developments in judicial proceedings in the Sixth and Ninth Circuits are expected.