Clearly there are some major economic challenges ahead. Many businesses may be able to withstand the challenges ahead but it may very well be that their trading counterparties (whether suppliers, customers or other stakeholders) will not. Whilst these times can represent an opportunity for some, such as potential acquirers (whether of businesses, assets or distressed debt), in most cases, the climate represents a threat to businesses.
The Corporate Insolvency and Governance Bill (the "Bill") was published on 20 May 2020. The Bill introduces a new type of ‘moratorium’ whereby eligible companies can take 40 days to restructure without the threat of enforcement action from creditors.
The Corporate Insolvency and Governance Bill 2019-21 (the “Bill”) published on 20 May 2020, had its third reading on 3 June 2020. This briefing focuses on the proposed changes to shareholder meetings and Companies House filing deadlines. For the purposes of this briefing, the “Relevant Period” began on 26 March 2020 and ends on 30 September 2020.
1. Flexibility for holding shareholder’s meetings.
Market conditions and Covid-19
The Covid-19 pandemic and the response to it, including global lockdowns, has caused substantial disruption to business operations and trade which has resulted in significant cash flow and financial challenges for many businesses. As a result, in a number of cases, financing covenants have been breached which have triggered defaults under financing arrangements.
Shenzhen Everich Supply Chain Co, Ltd (in Liquidation in the Mainland of the People's Republic of China) [2020] HKCFI 965 (date of judgment: 4 June 2020)
For the second time the Hong Kong Court has recognised a PRC winding-up proceeding and granted assistance to the administrator of a PRC company appointed by a PRC Court. The Hong Kong Court also granted the administrator an express right to take control of the company's subsidiaries in Hong Kong.
Background
One of the largest bankruptcy orders ever made in the English courts (in the region of £870 million) has been set aside to allow a creditors’ meeting to take place in order to consider an individual voluntary arrangement. In (1)Gertner (2) Laser Trust v CFL Finance Ltd [2020] EWHC 1241 (Ch), Mr Justice Marcus Smith has held that unless a breach of the good faith rule can be established, it is inappropriate for the court to refuse an application supported by a majority of creditors to stay a bankruptcy petition.
COVID-19 has impacted all businesses and economies around the globe with a precipitous decline in demand and supply as a result of quarantine orders, business closures, and social distancing. International Monetary Fund research suggests that the world economy may shrink (in the year 2020) by 3% with the trade volume falling by 11% and the oil prices by 42% (World Economic Outlook, April 2020: The Great Lockdown). In these challenging circumstances and with significant level of debt, many companies are at the onset of insolvency.
Applying for permission to advance fresh evidence on appeal is a tricky application, which has had varying degrees of success in the courts. Zheng Yougxiong v Gate Ventures Plc(1) is a useful example of the application of the criteria, albeit in the context of insolvency proceedings.
Background
Mr Zheng was a shareholder in, and creditor of, Gate Ventures plc. He sought and failed to obtain an administration order against Gate Ventures plc on the basis of a £2.5 million debt (the First Application).
This note discusses two recent decisions of the Court of Appeal of Singapore that dealt with the standard of review to be applied in winding up proceedings where a debtor asserts that there is a dispute which parties agreed to resolve by way of arbitration.
Winding up proceedings
It is quite often that we see contracts providing for disputes arising under the contract to be resolved by way of arbitration.
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On Friday 24 April, RPC hosted a 30 minute webinar on the interaction of furloughing and insolvency law.
During this session, our Insolvency Partner Paul Bagon discussed the recent High Court judgement involving Italian restaurant chain Carluccio's, which entered administration at the end of March.