The economic picture has started to improve, with modest GDP growth in the first half of 2024. However, the enormous strains on business finances over the past four years have caused insolvency rates to rise sharply this year.
According to The Insolvency Service’s latest figures, company insolvencies in June 2024 were the third highest since monthly records started in 2020. Administrations in June 2024 were 22% higher than in June 2023, and the number of CVAs was 64% higher in June 2024 than June 2023.
In a significant recent judgment, the ADGM Court has clarified that it has jurisdiction to hear an action for fraudulent trading against the former directors of an onshore UAE company.
By way of background, NMC Healthcare LTD (NMC), and its various subsidiaries, were incorporated in onshore UAE. On 17 September 2020, NMC was redomiciled as an ADGM company. Shortly thereafter, on 27 September 2020, NMC was put into administration pursuant to the ADGM Insolvency Regulations 2015 and joint administrators (the Joint Administrators) appointed.
Case law relating to the potential recharacterisation of fixed charges tends not to come around too often, but the recent case of Re UKCloud Ltd follows (relatively) hot on the heels of the Avanti Communications case, discussed here.
The case background
Since the pandemic, during which insolvency rates were low due to Government measures, there has been a considerable rise in insolvencies in the UK and many other jurisdictions. High interest rates have significantly increased the cost of borrowing and many companies are saddled with mountains of debt that was taken out in better times and which are now difficult to repay. In addition, high inflation and energy costs, lower consumer confidence and volatile supply chains have all contributed to making the last few years very difficult for businesses.
The adage ‘there is no such thing as a free lunch’ rings true for the 831 company directors disqualified in 2023/24 for abusing the Covid financial support scheme.
The Superior Court of Quebec rules in favor of Export Development Canada (“EDC”) and enforces a "[unequivocal]" Waiver against the surety who signed it in the context of a loan guarantee granted to the RBC.
Relevant Facts
Following our article on statutory demands (“SD”), if a company has received a SD and has failed to raise a legitimate dispute or make payment, then the creditor can proceed with a winding up petition. Winding up petitions play a crucial role in the legal landscape, particularly in the context of debt recovery and business insolvency.
A statutory demand (“SD”) is a formal written request for payment of a debt, typically issued by a creditor to a debtor. This legal document serves as a precursor to more severe actions, such as winding up proceedings or bankruptcy. Understanding the key aspects of a SD is crucial for both creditors seeking repayment and debtors facing potential legal consequences.
1. Purpose and legal basis
The past few weeks have brought more news stories of doom and gloom from the hospitality sector with statistics showing that the number of insolvencies is at an all-time high. Data published by UHY Hacker Young shows the number of pub and bar insolvencies increased from 438 to 725 over the last year. Insolvency specialist Begbies Traynor has recently reported that higher interest rates are pushing an increasing number of companies into insolvency.
The Kingdom introduced its first ever bankruptcy law in 2018 which has created a foundation for a business rescue culture in Saudi Arabia. Companies undergoing financial difficulties are equipped with the tools that allow them to either trade out of a difficult period or liquidate the business in a manner which does not leave creditors out of pocket. More recently, to complement the existing insolvency regime, rules of cross-border bankruptcy proceedings came into effect on 16 December 2022 (“Rules”).