UK members will want to monitor the situation and prepare for contingencies as US company experiences financial difficulties
On Monday 7 November 2023 WeWork Inc. filed for Chapter 11 bankruptcy in respect of its US business, and intends to file for recognition of those proceedings in Canada.
El Tribunal Supremo recuerda que la prohibición de las sentencias condenatorias con reserva de liquidación debe interpretarse de manera flexible, atendiendo a los motivos justificados y razonables de cada caso en particular
Damos noticia de la sentencia del Tribunal Supremo núm. 1228/2023, de 14 de septiembre, que analiza una cuestión de enorme interés práctico, como son las sentencias de condena con reserva de liquidación.
Evolución de la normativa
The ruling emphasises the need to flexibly interpret the prohibition in light of the reasonable grounds of each case
The Supreme Court's decision on the interpretation of the ban on sentences with a reservation of liquidation – numbered 1228/2023 and dated 14 September – has significant practical importance.
Regulatory developments
The regulation of sentences with a reservation of liquidation has significantly changed over the years.
Dispute Resolution analysis: In a second appeal, the Court of Appeal has upheld the decisions of two lower Courts in concluding that due to the conduct of a bankrupt and his insolvency, his bankruptcy should not (on an exercise of discretion) be annulled, despite concluding that the bankruptcy order should not have been made.
Khan v Singh-Sall and another [2023] EWHC 1119 (Ch)
What are the practical implications of this case?
Under the Insolvency Act 1986 (IA 1986), office-holders are given wide powers but they are subject to the control of the court. In order to allow insolvency practitioners to carry out their duties efficiently and without having constantly to look over their shoulders, this control has always been exercised with a light touch. In recent years there have been several important cases examining these issues.[1]
After the tumult of the past few years, with emergency legislation being introduced to mitigate the impact of the Covid-19 pandemic, the last few months have felt relatively quiet in terms of new legislation. That said, there have been a number of important government publications in relation to the insolvency industry, and it appears that change is on the horizon.
Early engagement, targeted information requests and use of the court's disclosure powers may assist consideration of whether to support or oppose a plan
Since their introduction in 2020, restructuring plans have become increasingly common in the retail and consumer sectors, including fitness centres (Virgin Active and Fitness First), casual dining (Prezzo) and, most recently, in greeting cards and gifting (Clintons).
HMRC has taken an increasingly active role in opposing restructuring plans with which it does not agree
Previously in this series, we explored whether restructuring plans present an alternative to formal insolvency, as well as the court's ability to exercise a cross-class cram down on opposing creditors.
The new law emphasises preventive restructuring, cross-border cooperation and equitable treatment of creditors
The European Union has recognised the need for harmonised insolvency laws across its member states and has taken a significant step forward with the introduction of the new EU Restructuring Directive ((EU) 2019/1023).
This directive aims to establish a common framework for insolvency proceedings, thereby enhancing cross-border cooperation and safeguarding the interests of all stakeholders involved.
Even if the statutory conditions for cramming down the votes of dissenting creditors has been met, the court retains a discretion to consider other factors
Certain statutory conditions need to be met in order for the court to sanction a plan at least one class of creditors or members has not voted in favour of the plan by the requisite majority (being 75% in value of those present and voting) – referred to as the "cross-class cram down".