This week:
On 19 July 2023, the parliament of the Grand Duchy of Luxembourg (Luxembourg) passed bill no. 6539A into law (the New Insolvency Law), marking a significant milestone in the movement to modernise and enhance the competitiveness of Luxembourg’s insolvency framework. The bill has been under discussion for a number of years and aims to curtail the use of bankruptcy as an insolvency solution in favour of the preemptive preservation or reorganisation of financially distressed companies.
Restructuring plans under Part 26A of the Companies Act 2006 are a powerful tool for restructuring the debts of a company.
This week:
Court imposes compensation order on disqualified director
The court has ordered a disqualified director of an insolvent company to pay personal compensation to creditors.
The court orders a disqualified director of an insolvent company to pay personal compensation to creditors.
This is only the second time the courts have considered a personal compensation order against a disqualified director since their introduction in 2015.
What happened?
Secretary of State v Barnsby [2023] EWHC 2284 (Ch) concerned an individual who was the sole director and majority shareholder of a company that sold package holidays.
The High Court has considered the point at which the directors’ duty to consider the interests of creditors arose in the context of a tax mitigation scheme that ultimately failed
The judge found that the duty to consider creditors’ interests had arisen once the directors had become aware that there was a real risk that the scheme would fail and that the company would therefore be unable to pay its debts.
After a 10-month inquiry process, on 12 July 2023 the Parliamentary Joint Committee on Corporations and Financial Services (PJC) delivered its final report on the effectiveness of Australia’s corporate insolvency laws.
In this alert, we distil some of the key findings from the almost 400-page report and consider what future law reforms might look like.
A COMPLEX AND INEFFICIENT SYSTEM
Yesterday, the Supreme Court (SC) handed down judgment in Philipp v Barclays Bank UK Plc [2023] UKSC 25. In summary, the SC found that banks do not owe a duty to refrain from executing customers’ direct payment instructions where there may be an attempt to defraud the customer.
On 7 July 2022, the UK Government published a consultation on changing UK law to implement two model laws in the field of insolvency that have been adopted by the United Nations Commission on International Trade Law (UNCITRAL). These are:
The Court of Appeal in Hunt v Ubhi has confirmed that insolvency practitioners seeking freezing orders are subject to the default requirement of providing an unlimited cross-undertaking in damages.