Following are this week’s summaries of the Court of Appeal for Ontario for the week of November 14, 2022.

The COVID-19 Pandemic hit the travel industry hard. Borders were closed, airline fleets were grounded, travel bookings were cancelled, and travel agents were overwhelmed with customers wanting refunds.

Many travel agents closed their doors because travel bookings dried up.

STA Travel was one. Across 27 stores in Australia, STA Travel operated as a travel agent, booking travel for customers as agent for travel providers, mainly airlines and tour operators.

The recent decision of the Court of Appeal in Fennell v Appelbe  [2022] IECA 160, upholding the decision in the High Court, appears at first glance to endorse a stricter approach to restriction proceedings with regard to non-executive directors.

On closer analysis however, it is clear that the judgment is very much fact specific and not inconsistent with the decision of the Supreme Court in the Re Tralee Beef & Lamb Limited [2008] 3 IR 347 case and the decisions of the High Court in cases such as:

Directors who oppose the winding-up of an insolvent company in the hope that a restructuring proposal would come to fruition should tread carefully and consider seriously whether to put the company into liquidation.

With rising insolvency rates, driven in particular by the number of creditors’ voluntary liquidations reaching record highs, the decision in the recent Court of Appeal case of PSV 1982 Limited v Langdon [2022] EWCA Civ 1319 serves as a timely reminder for directors of the personal risks involved in re-using the name of a liquidated company.

Germany eases directors' duty to file for insolvency

November 14, 2022

AUTHORS Dr. Wolfram Prusko | Dr. Joachim Glckler | Dr. David Ehmke

With effect as of November 9, 2022, Germany eases directors' duty to file for insolvency. In response to global business uncertainty and the current energy crisis, Germany enacted the Law on the Temporary Adjustment of Restructuring and Insolvency Law Provisions to Mitigate the Impact of Crises (SanInsKG).

On 24 October 2022, Dubai Court of First Instance declared Arabtec Holding Company bankrupt and approved the liquidation of its assets. The decision highlights the responsibilities of directors, board members and managers of all companies, and the possibility they can be held liable and accountable under UAE Laws for the mismanagement and the fallout of a company.

The Court appointed two trustees to list the assets of the bankrupt company, complete the liquidation and pay the creditors. Regarding the company’s governance, directors, managers and current assets, the Court ruled:

Can a Company Voluntary Arrangement (“CVA”) complete, but still remain in place and bind creditors?

The simple answer is yes; but it does require (a) the terms of the CVA to be carefully drafted to allow notice of completion to be filed before the end of the CVA term; (b) compliance with the terms of the CVA, and (c) careful consideration of the position of the supervisors, creditors and company.

Judicial comments cast doubt on the ability to compromise US law-governed debt effectively based on Chapter 15 recognition alone.

Directors of Australian companies face significant personal monetary – and potential criminal and adverse professional – consequences if they allow the company to trade whilst insolvent.

Australian insolvent trading laws are harsher, and more frequently utilised to prosecute directors personally, than in many other jurisdictions including in the US and the UK.

Accordingly, frequent assessment of a company's solvency by its directors is crucial, particularly in financially difficult times, as are active steps to address any potential insolvency.