This update explains the key changes in cross-border insolvency proceedings if the UK leaves the EU without a deal on 31 October 2019 (or at a later date). Importantly, a no-deal exit will impact how and where such insolvency proceedings can be raised in a post-Brexit future.
A bit of background
While the UK is still an EU Member State, EU Regulations provide a clear framework for conducting cross-border insolvency proceedings. The EU Insolvency Regulations (the 2000 Insolvency Regulation and the 2015 Recast Insolvency Regulation) include provisions which:
The liquidation of Thomas Cook Group last month – and the ensuing cancellation of all flights and repatriation of 140,000+ customers – has prompted fresh scrutiny of the UK’s approach to airline insolvency.
Back in March, we highlighted the launch of a consultation following the UK government’s proposal to introduce a new “secondary preferential” status for HMRC. Further details of the proposal can be found here : HMRC launches consultation on new “secondary preferential” status.
As the insolvency profession in Scotland continues to get to grips with the new corporate insolvency rules, Re Sprout Land Holdings Ltd (in Administration) serves as a timely reminder not to forget the basics when dealing with the appointment of administrators by the directors of a company.
An old friend
In a Court of Appeal decision handed down last week the court considered the interplay between the construction adjudication process on the one hand and the insolvency regime on the other.
In its recent decision in LBI EHF v Raiffeisen Bank International AG [2018] EWCA Civ 719, the Court of Appeal confirmed the wide discretion enjoyed by a non-defaulting party under the default valuation provisions in the Global Master Repurchase Agreement (2000 edition) (“GMRA”) when it comes to determining the “fair market value” of securities.
In particular, when assessing “fair market value”, the non-defaulting party is entitled to have regard to any distressed or illiquid market conditions that were being experienced at the relevant time.
The long awaited new Scottish Insolvency Rules for Company Voluntary Arrangements and Administration (The Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018) were laid in Parliament today. The Rules are a negative SI which means they do not need active approval by Parliament and will automatically come into effect as law unless either the Commons or Lords annuls them within a fixed period after they have been laid. The intention is that they will commence on 6 April 2019.
It’s been reported that the board of directors of AIM-listed Patisserie Holdings plc, which owns the Patisserie Valerie chain of cafés, was not aware for almost a month that HMRC had filed a petition at the High Court of England and Wales to wind up its main trading subsidiary, Stonebeach Limited.
Recently, there have been a number of high profile insolvencies hitting the headlines with a number of High Street retailers entering insolvency either by proposing a company voluntary administration (“CVA”) or via another formal insolvency process. With the recent number of high profile insolvencies there has been scrutiny of directors’ duties not only by media but also at government level.