Unlawful Means Conspiracy
House of Fraser, the struggling UK department store has gone into administration but is to be acquired by billionaire Mike Ashley, the owner of Sports Direct. There are regulatory difficulties with his acquisition of the Dundrum branch at the moment, but it is anticipated that the entire group including Dundrum will be fully operational in good time to capitalise on the Christmas market.
However, what does this mean for customers with unused gift cards?
We summarise the key legislative changes planned by government relating to insolvency and corporate governance and focus on what they mean for investors, including the private equity community
The government has published its response to the consultation on insolvency and corporate governance. The document sets out its proposed next steps; in some areas the government will legislate but in other areas further consultation will be needed.
The proposed insolvency reforms include
• the introduction of a new moratorium to give ultimately viable financially distressed companies a period of time when creditors (including secured creditors) cannot take action against the company, allowing it to make preparations to restructure or seek new investment;
Directors should seek advice from in-house or external legal professionals whenever executing documents, even if they believe that they understand the consequences of what they are signing. They should also record their decision-making process to ensure that they comply with the Companies (Miscellaneous Reporting) Regulations 2018. Wessely v White serves as a timely warning in this regard.(1)
Recently, there have been a number of high profile insolvencies hitting the headlines with a number of High Street retailers entering insolvency either by proposing a company voluntary administration (“CVA”) or via another formal insolvency process. With the recent number of high profile insolvencies there has been scrutiny of directors’ duties not only by media but also at government level.
Are you a company director? If so, are you fully aware of your responsibilities and duties to your company? It is common for directors to be completely uninformed of the full extent of their duties, sometimes holding the belief that they can essentially do what they like – particularly if they are also a sole shareholder, which is often the case with SMEs.
What are directors’ duties?
Over the last two years, BEIS has issued a number of consultations either focussed on, or touching upon, corporate governance issues in insolvency or the broader insolvency framework.
The Government has published its response and action plan following its consultation in March this year on reforming the UK’s corporate governance landscape in the context of insolvent companies.
In its original consultation, the Government put forward various proposals to deal with perceived deficiencies in the management of troubled companies that may be leading to poorer outcomes for creditors, employees and other stakeholders.
In early 2017 we reported that following various scandals affecting business in the UK, the Government had made it clear that it intended to crack down on unacceptable boardroom behaviour.
A report published by the Business, Energy and Industrial Strategy Committee suggested that the existing law governing corporate governance did not require revision. However, the Committee recommended a number of measures including a voluntary code of corporate governance for large private companies.