In a recent decision, the Court of Appeal reconfirmed that the Duomatic principle can only apply where all shareholders have approved the relevant act of the company. It is not enough that a relevant individual would have approved the act had they known about it: Dickinson v NAL Realisations (Staffordshire) Ltd [2019] EWCA CIV 2146.
The high street is experiencing a rash of administrations, but could regulators fix the mess?
In The Sun Also Rises, Ernest Hemingway neatly summed up how bankruptcy happens. It occurs two ways: “Gradually. Then suddenly.” The British retail landscape has seen a flurry of such calamities. Thomas Cook, House of Fraser, L.K.Bennett, Debenhams, Links of London, Goals Soccer Centres, Mothercare and Jack Wills all struggled for periods before collapsing into various forms of administration.
Being involved with a company which is experiencing financial difficulties is clearly a stressful experience for directors. As well as having to deal with the operational consequences of the company’s distress, directors must ensure that they comply with their duties and obligations under the Companies Act 2006 (CA2006) and the Insolvency Act 1986 (IA1986). Directors of listed entities are in a particularly difficult position, as in addition to those duties they must comply with their obligations to the markets.
Directors’ duties
Background
High-profile use of company voluntary arrangements or CVAs, has led to widespread media coverage and controversies. Household names such as Jamie's Italian, Prezzo, Toys R Us, Mothercare, Gourmet Burger Kitchen and more recently Debenhams are amongst the growing list of companies who have followed this well-trodden path, with varying degrees of success. Those companies unable to turn their fortunes around face administration or liquidation.
In Secretary of State for Business, Energy and Industrial Strategy v PAG Asset Preservation Ltd [2019] EWHC 2890 the Secretary presented petitions under s 124A of the Insolvency Act 1986 to wind up two companies on public interest grounds. These companies were PAG Asset Preservation Limited and MB Vacant Property Solutions Limited (the Companies).
In this three part blog we highlight three recent court decisions concerning landlord rights and insolvency, which provide cautionary warnings and surprising twists. The questions we consider are:
- Does a company voluntary arrangement (“CVA”) permanently vary the terms of a lease?
- Can a landlord be forced to accept a surrender of a lease?
- What are the consequences of taking money from a rent deposit if the tenant company is in administration?
In part 1 we consider the first question.
E-filing a notice of appointment of administrators outside of court counter opening hours can impact the validity of an administrator’s appointment.
To secure an order for the #winding-up of a Quasi-Partnership company on the Just& Equitable ground, is it necessary only to show that mutual trust and confidence between the shareholders/quasi-partners has broken down? Hardwicke investigates the recent case of Badyal v Badyal & Ors [2019] EWCA Civ 1644
Background
在与向英国供货的国际公司合作的过程中，我们发现了一些常见问题。在上一篇文章中，我们研究了客户可能面临的破产程序类型。在“五行”系列第四篇文章中，我们围绕“火”元素来说明破产执业者在进入破产程序时拥有的重大权力：调查不当行为，并将资产收回统一偿还债权人。
火：破产执业者对债权人欺诈性交易的重大权力
破产执业者(不论是清算人或管理人)可以向法院申请撤销在公司进入破产程序前进行的特定交易。通过这种方式，可以收回资产或资金，统一向债权人偿付。下列情形属于“先前的”或“可审查”的交易：
1. 公司的资产或财产被低价出售；
2. 公司在进入破产程序前给予某债权人优先权，使其处于比其他债权人更有利的地位；
3. 公司订立了敲诈性信贷交易（交易条款有严重的敲诈性）；
4. 公司设立了无效浮动抵押，即为已发放的贷款或已提供的货物及服务的成本提供担保；
5. 公司订立的交易具有欺诈债权人的明确目的，即：使公司的资产脱离破产执业者和债权人的控制范围。
不同类型的可审查交易有不同的时间要求。例如，低价出售必须发生在公司进入破产程序前的两年内。
Originally published on LexisLibrary and LexisPSL
Restructuring & Insolvency analysis: Thomas Cook is the third large company to be wound up by the courts in 18 months, following British Steel and Carillion in 2018. Professor Andrew Keay, barrister at Kings Chambers, 9 Stone Buildings and Lincoln’s Inn and Professor of corporate and commercial Law at the University of Leeds, discusses why it entered liquidation rather than administration and how it will impact employees and customers of Thomas Cook.
Original news