Temporary provisions restricting action to wind up companies and reverse some winding up orders already made are a step closer following presentation of the Corporate Insolvency and Governance Bill (“Bill”) to the House of Commons on 20 May. The Bill will now work its way through both Houses before imminently becoming law. The Bill includes a number of substantial corporate insolvency changes, but also temporary provisions restricting action to wind up companies in light of Covid-19, on which we focus here.
Judge Barber has considered the order of priority of payments in an administration and - more specifically - whether the Lundy Granite principle applies to both the rent payable once a company has gone into administration, and to the “top up” obligation requiring the company to replenish a rent deposit, where a landlord had drawn down on the deposit against unpaid rent (Re London Bridge Entertainment Partners LLP (in administration) [2019] EWHC 2932 (CH)).
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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.
The new Amendment on the Czech Insolvency Act (the “Amendment”) will enter into force on 1 July 2017.
The Amendment introduces a “liquidity gap” test, which will be used when a debtor (entrepreneur) needs to determine whether it is considered insolvent or not. The liquidity gap is the difference between a debtor’s due debts and its readily available funds. A debtor will only be considered insolvent if the liquidity gap is higher than 10% of its overdue debts.
Whilst there is evidence that, especially in the retail market, the number of store closures and resulting empty units is at its lowest level since a peak in 2012, high profile announcements such as that of BHS mean that they are still a reality. The Court has, with this decision, provided a timely reminder of the principles of surrender by operation of law of which landlords, tenants and guarantors should be mindful.
Summary
Case: The joint administrators of African Minerals Limited (in administration) v Madison Pacific Trust Limited and Shangdong Steel Hong Kong Zengli Limited (HCMP 865 of 2015)
On 14 April 2014, the Official Gazette published Order 562 of 1 April 2014 for the amendment of and supplement to Order 235 of 2001 regarding the insurance of tourists against the insolvability or bankruptcy of travel agencies (“Order 562/2014”).
CMS is advising HSBC on its expedited appeal of a recent controversial decision by the High Court refusing assistance under the cross-border assistance provisions of section 426 of the Insolvency Act 1986. The decision of the Court of Appeal will be of great interest to those involved in cross-border insolvency and restructuring as well as foreign courts.
In our Law-Now of 4 April 2012 (click here for link), we reported on the decision of the court in the case of Leisure (Norwich) II Limited v Luminar Lava Ignite Limited (in administration). The detailed judgment has now been released, setting out the rationale for the decision and summarising the position on rents in administration generally.
The legal position on this issue is now:
Hungary has passed an Act that implements EU Directive 2019/1023 on preventive restructuring frameworks, the discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt (amending EU Directive 2017/1132). This new Act was published in Hungary's Official Gazette on 3 June 2021 and will come into force on 1 July 2022.