In the light of immense pressure on the liquidity of many companies and obligations to file for insolvency in case of illiquidity or overindebtedness, the Germany government will suspend this obligation until 30 September 2020. The suspension will apply if the insolvency is caused by the coronavirus pandemic and if there are sufficient prospects that the company can be turned around.

In last week's Government budget, the Chancellor of the Exchequer confirmed that Crown preference would return but that this would be delayed to 1 December 2020. We previously wrote about Crown preference in November 2018 when the Government first suggested its return. That post, which is available here, is a handy summary of what Crown preference is and its impact on secured creditors.

In this week’s update: an update from the Parker Review on board ethnic diversity, the Investment Association sets out its 2020 priorities and a few other items.

The case of Hunt (as Liquidator of System Building Services Group Ltd) v Michie & Ors [2020] EWHC 54 (Ch) examines whether directors’ duties continue after the company has become insolvent and confirms that they do, bringing welcome clarity to the point. As such, Insurers will need to review their policies to make clear if they wish to cover this risk.

2019 has been a busy year for restructuring specialists. Although the UK economy narrowly avoided a recession, a combination of continued domestic and international political uncertainty, decreased consumer confidence and challenging conditions in certain sectors has meant that a number of businesses have gone through restructurings and, in some high-profile cases, insolvency processes during the year.

Prelude

India and the United Arab Emirates (‘UAE’) have witnessed dynamic bilateral relations in the recent past. Leadership of both countries have endeavoured to bolster ties of the two economies which has aligned India to achieve its insatiable ambition of emerging as a USD 5 trillion economy.

Das Oberlandesgericht München hat in einem bisher unveröffentlichten Hinweisbeschluss^[1] die Rechtsauffassung des Oberlandesgerichts Celle^[2] und des Oberlandesgerichts Düsseldorfs^[3] bestätigt, dass für Ansprüche des Insolvenzverwalters gegen Geschäftsführer wegen Zahlungen trotz Insolvenzreife kein Versicherungsschutz unter einer D&O-Versicherung besteht. Daneben hat das Oberlandesgericht München auch zur Verteilung der Darlegungs- und Beweislast in Abtretungskonstellationen Stellung bezogen.

In this week’s update: The court finds that selfdealing by a director and a share buyback were void, the PERG report on compliance with the Walker Guidelines, the BVCA and EY review private equity portfolio company performance, the QCA reports on AIM company corporate governance and a few other items. 

Court confirms self-dealing by director was void

Being involved with a company which is experiencing financial difficulties is clearly a stressful experience for directors. As well as having to deal with the operational consequences of the company’s distress, directors must ensure that they comply with their duties and obligations under the Companies Act 2006 (CA2006) and the Insolvency Act 1986 (IA1986). Directors of listed entities are in a particularly difficult position, as in addition to those duties they must comply with their obligations to the markets.

Directors’ duties

Discovery (Northampton) Ltd & others v Debenhams Retail Ltd & others [2019] EWHC 2441(Ch)

Company Voluntary Arrangements (“CVAs”) are seen as most unfair by landlords who are often forced to continue to make a supply of premises at an imposed reduced rent.