A recent TCC decision highlights the dangers of withholding payment against contractors with a view to pushing them into insolvency. The court allowed the recovery of insolvency professional fees as well as a substantial sum reflecting a reduced settlement reached with a third party on a separate project. The court’s decision has ramifications for any party seeking to withhold large payments under a construction contract against a party who is likely to suffer serious cash-flow pressure as a result.
A recent TCC decision has ruled that adjudication proceedings cannot be brought by companies in liquidation in relation to financial claims under a construction contract. The decision will have considerable ramifications for the practical management of liquidations for companies with exposure to construction contracts. The decision would appear to run contrary to current liquidator practice, both as to the use of adjudication proceedings in liquidations and as to the assignment of claims to third parties, but essentially only confirms the mandatory nature of insolvency set-off.
On June 27, 2018, the Second Circuit denied Nordheim Eagle Ford Gathering, LLC’s petition for a panel rehearing and request that the court certify issues of Texas property law to the Texas Supreme Court. The denial leaves in place the Second Circuit’s May Summary Order affirming the widely publicized decisions of the bankruptcy and district courts below which concluded that the midstream contracts could be rejected because they did not create covenants running with the land under Texas law.
Summary of Key Takeaways
What does it take to represent a private equity client entangled in a complex restructuring involving an important investment in a portfolio company?
Ask David Meyer, the Vinson & Elkins New York-based restructuring partner who led the V&E team representing Riverstone Holdings in the restructuring of Gulf of Mexico oil producer Fieldwood Energy.
In many ways, the case serves as a template for navigating amid a set of highly challenging circumstances.
Speed read
The British government has commenced an airline insolvency review, in the wake of recent high profile airline failures such as Monarch and Air Berlin, and on the premise that changes in the industry have outpaced protection regimes.
The review will focus on two main areas: repatriation of stranded passengers and redress for consumers. There is a desire to minimise repatriation costs falling on the public purse and ensure that consumers have clear avenues of redress.
We closed the first quarter of 2018 following a period of intense scrutiny on the restructuring and insolvency profession. The stress in the retail and dining sectors, the increase in CVAs and the various attendances of stakeholders in the profession before Select Committees has been the forerunner to two consultation papers.
On February 27, 2018, the United States Supreme Court issued a unanimous opinion in the Merit Management Group, LP v. FTI Consulting, Inc. case, holding that funds that are merely transferred through a financial institution are not afforded the Bankruptcy Code “safe harbor” protections of 11 U.S.C. § 546(e), which precludes the avoidance or “clawback” of certain transfers; rather, whether the safe harbor applies in a given case will depend on the whether the parties to the overarching transfer are listed as protected parties in the statute.
The Inner House of the Court of Session has found that, where a business had no realistic prospect of continuing in existence, it was not appropriate to assess whether a property was sold at an undervalue by reference to a forced sale valuation.
The Court’s judgment serves as a valuable reminder of some fundamental principles of insolvency law.
The facts
A recent TCC decision has concluded that the contractor insolvency provisions of the JCT form continue to apply after a termination by the contractor for repudiation. This conclusion may give rise to surprising results and potentially allow an employer to claim from the contractor additional amounts incurred in completing the works with a third party even after termination for the employer’s own default and/or repudiation.
In Hellas Telecommunications (Luxembourg) [2017] EWHC 3465 (Ch), the High Court ordered respondent liquidators to disclose the identity of third-party litigation funders and the terms on which funding was provided in order to facilitate an application for security of costs.
Facts