We are pleased to share our latest instalment of ML Covered, our monthly round-up of key events relevant to those dealing with Management Liability Policies covering D&O, EPL and PTL-type risks.
Insolvency Service publishes its 2024/25 enforcement actions against directors
The Insolvency Service has published its enforcement outcomes for 2024-25, detailing the enforcement actions taken against directors. The information is not for the entire year but covers the period between April 2024 to December 2024.
Key developments in 2024
2024 has seen one of the most significant insolvency cases in recent years. In June, Justice Leech handed down his judgment on the claim brought by the liquidators of BHS against certain of its former directors for wrongful trading and misfeasance. This judgment is likely to have important consequences for the D&O market.
It was particularly noteworthy as it was the first time that the directors of a company had been found guilty of the novel claim of 'misfeasant trading'.
Manolete Partners Plc, an insolvency litigation finance company, has successfully claimed against the former director of Just Recruit Group Ltd (Just Recruit) and awarded £918,590. The Insolvency and Companies Court of the High Court found that the director of Just Recruit, Norman Freed, had breached his directorial duties to the company during the business's financial collapse.
Background
Welcome to the second edition of ML Covered, our new monthly round-up of key events that are relevant for those dealing with Management Liability Policies covering D&O, EPL and PTL-type risks.
Latest insolvencies figures & quantifying "trading misfeasance" claims
On 19 August 2024, the High Court handed down its quantum decision in Wright v Chappell [2024] EWHC 2166 (Ch), which for the first time sets out the method for quantifying loss relating to "trading misfeasance" claims.
Introduction
With the increase in global trade and business, often involving complex corporate structures in multiple jurisdictions, we expect to see a significant increase in cross-border insolvency and restructuring matters in coming years. This is especially the case with rapid advancements in technology and digital change driving “borderless” transactions and investments in every industry.
On November 11, 2022, the world’s second-largest cryptocurrency exchange FTX Trading Ltd. filed a petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware (Case No. 22-11068). The company reports $10 to $50 billion in both assets and liabilities and intends to place an additional, approximately 130 affiliates into bankruptcy.
On November 7, 2022, cloud manufacturing and digital supply chain company Fast Radius, Inc. of Chicago, IL filed a petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware (Case No. 22-11051). The company reports $69.3 million in assets and $55.2 million in liabilities.
On October 30, 2022, wealth advisory, risk management services and insurance brokerage services provider Vesta Holdings LLC of Mongomeryville, PA filed a petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware (Case No. 22-11019) along with two affiliates. The company reports $100 million to $500 million in both assets and liabilities.
On September 27, 2022, Phoenix Services Topco LLC, a steel mill service provider with approximately 2,600 employees, filed a petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware (Case No. 22-10906). The company reports $500 million to $1 billion in both assets and liabilities.