As we close the week which has seen the Government and the Bank of England publish details of their financial support package for business, the business community awaits the formal launch of both the Coronovirus Business Interruption Loan Scheme (CBILS) and the Covid Corporate Financing Facility (CCFF) next week.
CBIL scheme
The economic consequences of the Coronavirus epidemic have heavily impacted stock markets worldwide as investors quantify and manage the risks in underlying businesses often by quickly disposing of their investments. Whilst investors can liquidate their positions quickly the challenges for business managers run deeper. Decisions take longer to impact results and can be overturned by the unpredictability of the crisis. Most businesses will be impacted in some way and for many it will take management teams into new territory, the “zone of insolvency”.
This article was first published in The Commercial Litigation Journal.
We previously considered the potential implications for insolvency professionals of the rise of cryptocurrencies (available here). One of the principal issues identified was the uncertainty surrounding the legal status of cryptocurrencies; what class of asset were they and, subsequently, how would they be treated under English law?
On 4 December 2019, the Supreme Court handed down its judgment in MacDonald and another (Respondents) v Carnbroe Estates Ltd (Appellant) (Scotland) [2019] UKSC 57. The appeal concerned the interpretation of ‘adequate consideration’ under section 242 of the Insolvency Act 1986 (the “Act”) and the remedies that courts can apply if there is a gratuitous alienation, and inadequate consideration paid for the transaction in question.
There are today at least 2,352 different types of cryptocurrencies being traded on various exchanges1. As legislators, regulators, financial institutions, and other businesses have been seeking to understand the opportunities and risk presented by cryptocurrencies, smart contracts, and other fast-moving Fintech developments since the launch of Bitcoin around 10 years ago, on 18 November 2019 the UK Jurisdiction Taskforce of the Lawtech Delivery Panel published a Legal Statement2 in relation to cryptoassets and smart contracts, following a period of public con
Background
The aim of the compensation order regime, to make directors financially account for the consequences of their unfit conduct, applies to directors’ conduct after 1 October 2015 and gives the Secretary of State (“SoS”) the power to apply for a compensation order against a director who is either subject to a disqualification order or who has given a disqualification undertaking and the conduct of that person has caused loss to one or more creditors of the insolvent company.
A Sheriff has answered this question in the affirmative and given reasoning which will be helpful for trustees (under a trust deed) in considering whether to raise sequestration proceedings against the debtor.
Background
The Sheriff Court at Airdrie was asked in April 2019 to comment on the ability of a trustee under a trust deed to summarily apply for a debtor's sequestration in the case of David Mond v Craig Booth.
The lender's dilemma
Lenders who take security over shares in an English company have to decide whether to take either:
- a legal mortgage by becoming registered owner of the shares
- an equitable mortgage or charge with the chargor remaining the registered owner.
A legal mortgage gives the lender the right to vote subject to the terms of the mortgage document and prevents the chargor from disposing of legal title to the shares to a third party, as the lender is the registered owner of the shares.
The High Court has confirmed that a sale by a receiver to a buyer connected with the mortgagee does not engage the self-dealing rule and further considered the extent of the duties on an enforcement sale.