Two recent cases examine whether, given the impossibility to liquidate a company due to a corporate deadlock, a court can invalidate certain resolutions at the request of one shareholder.

Restructuring and Insolvency analysis: The respondents to a claim brought by the joint liquidators of BHS Group companies have successfully struck out parts of claims brought under sections 212 and 214 of the Insolvency Act 1986 (IA 1986) on the basis of open-ended pleadings as to the relevant date of knowledge that insolvent liquidation was inevitable and trading should have ceased.

Chandler v Wright and others [2022] EWHC 2205 (Ch)

What are the practical implications of this case?

UK judgment is a prompt for landlords to consider all angles to maximise rent recovery in harsh economic conditions

The UK High Court has ruled in in favour of a landlord whose original tenant and guarantor were held liable for the rent accrued on a gym in Leeds despite the subsequent assignee operating under a restructuring plan.

Dispute Resolution analysis: The High Court has granted an application to wind up a company incorporated in Luxembourg in a decision which sheds light on the application of cross-border insolvency principles following the UK’s departure from the European Union.

Barings (UK) Limited and ors v Galapagos SA [2022] EWHC 1633 (Ch)

What are the practical implications of this case?

The reforms respond to the needs of small and medium-sized companies, speed up processes and support business recovery

The Spanish Congress has approved (30 June 2022) the Insolvency Law Reform Bill, which transposes the Directive on restructuring and insolvency. A first text was approved in December 2021, but amendments were introduced throughout the first half of 2022 that modified several important points.

King & Ors v Kings Solutions Group Ltd & Ors [2022] EWHC 1099 (Ch)

Background

This appeal arose in the context of long-running and complex dispute between the shareholders of Kings Solutions Group Limited (‘the Company’).

The Insolvency Service is satisfied that the restructuring plan and moratorium processes are broadly meeting their policy objectives – and that ipso facto clauses are likely to be used more in future

Insolvency practitioners will welcome the confirmation that they cannot be expected to be aware of same degree of information as if company was still trading

The Court of Appeal has confirmed that although insolvent parties may refer disputes to adjudication, they will have difficulty enforcing adjudication decisions in all but exceptional circumstances

New requirements brought in during the Covid-19 pandemic have added to the potential procedural pitfalls facing creditors seeking a winding up order in recent months. They have also led to quite a lot of adjourned hearings and delays.