A "Liquidation Preference" is a clause in investment and shareholders’ agreements that determines the order in which proceeds from a liquidity event (such as a trade sale or asset sale) are distributed among different shareholders. This clause often pertains primarily to preferred shareholders, such as venture capital investors.

Economic headwinds continue to make life difficult for retail and leisure operators. Wilko, of course, is the latest high profile retailer to enter administration, following on the heels of retailers such as Paperchase, Hotter Shoes and AMT Coffee. Cineworld's route out of Chapter 11 bankruptcy has involved the administration of its UK parent, although the operating companies have remained unaffected.

Claimant law firms are working hard to develop routes for holding parent companies and their boards responsible for trading activities carried out through subsidiary companies. The recent decision in Aston Risk Management v Jones and others provides clarity on when a registered director of a parent company can be found to be a de facto director of an operating subsidiary.

The Federal Labour Court (Bundesarbeitsgericht, BAG) had to decide in which case a social compensation plan endowment by the conciliation committee is economically unjustifiable for a company outside of insolvency. This shall be the case if the fulfilment of the social compensation plan obligation would lead to illiquidity, balance sheet over-indebtedness or an unacceptable reduction of the company's equity. If the endowment was economically unjustifiable, the discretion of the conciliation committee was exceeded and the social compensation plan therefore invalid.

Das Bundesarbeitsgericht (BAG) hatte darüber zu entscheiden, wann eine Sozialplandotierung durch die Einigungsstelle für ein Unternehmen außerhalb der Insolvenz wirtschaftlich unvertretbar ist. Dies sei der Fall, wenn die Erfüllung der Sozialplanverbindlichkeit zu einer Illiquidität, einer bilanziellen Überschuldung oder einer nicht mehr hinnehmbaren Schmälerung des Eigenkapitals der Gesellschaft führe. Liege danach eine wirtschaftliche Unvertretbarkeit vor, sei das Ermessen der Einigungsstelle überschritten und der beschlossene Sozialplan unwirksam.

After a lull during the pandemic, it is expected that the number of company insolvencies in Ireland will increase as financial pressures on businesses intensify following the withdrawal of temporary government supports. Recent changes to directors’ duties bring into sharp focus the actions of, and decisions taken by, company directors in the period leading up to the insolvent liquidation of a company.

The Supreme Court’s recent judgment in BTI 2014 LLC v Sequana SA [2022] UKSC 25 is a significant decision for the law of directors’ duties.

The Autumn budget will have done little to ease the concerns of companies facing significant trading pressures as the country tries to get back on its feet following the pandemic, the ongoing effects of Brexit, the Ukraine conflict and the current cost of living crisis. Inflation has now topped its forecasted peak at 11.1%; there are soaring energy prices and the UK is now officially in recession.

The Third Parties (Rights against Insurers) Act 2010 (the “2010 Act”) came into force on 1 August 2016 and replaced the Third Parties (Rights Against Insurers) Act 1930 (the “1930 Act”).

The previous 1930 Act had enabled a third party to bring a claim directly against an insurer where the insured had become insolvent, however a claimant had to (i) restore a dissolved company to the register of companies and obtain the leave of the court to allow proceedings to be commenced; (ii) obtain judgment against the insured; and (iii) commence separate proceedings against the insurer.

Litigation funding continues to be a popular investment vehicle in the UK as the assets available to funders topped £2bn at the start of the decade. Bloomberg has noted that a “flood of money” was moving into the area. This trend appears likely to continue as funders are attracted to litigation as an investment vehicle as economic uncertainty persists and the post-COVID litigation landscape develops.