INSURANCE AND REINSURANCE DISPUTES

2020 REVIEW

The contents of this publication are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.

INSURANCE AND REINSURANCE DISPUTES 2020 REVIEW

Contents

Preface

In this edition, now in its 7th year, we review the trends and developments in M&A across a wide range of countries and territories in the Asia Pacific region throughout 2019, and discuss our thoughts on the anticipated market trends for 2020 and beyond.

Asia Pacific M&A in 2019

Key themes across the 2019 Asia Pacific market include:

From 1 December 2020 onwards, HMRC will be treated as a preferential creditor of companies for certain taxes including PAYE, VAT, employee NICs and Construction Industry Scheme deductions. In the event that a company enters administration or liquidation, HMRC's claim for these taxes will rank ahead of any floating charge holder.

This reflects recent changes made to the Finance Act 2020.

The impact on floating charge holders

In Uralkali v Rowley and another [2020] EWHC 3442 (Ch) – a UK High Court case relating to the administration of a Formula 1 racing team – an unsuccessful bidder for the company's business and assets sued the administrators, arguing that the bid process had been negligently misrepresented and conducted.

The court found that the administrators did not owe a duty of care to the disappointed bidder. It rejected the claimant's criticisms of the company’s sale process and determined that the administrators had conducted it "fairly and properly" and were not, in fact, negligent.

In Uralkali v Rowley and another [2020] EWHC 3442 (Ch) – a UK High Court case relating to the administration of a Formula 1 racing team – an unsuccessful bidder for the company's business and assets sued the administrators, arguing that the bid process had been negligently misrepresented and conducted.

The court found that the administrators did not owe a duty of care to the disappointed bidder. It rejected the claimant's criticisms of the company’s sale process and determined that the administrators had conducted it "fairly and properly" and were not, in fact, negligent.

In the face of increased tenant bankruptcies caused by the COVID-19 pandemic, a key question arises for commercial landlords: what protection do I have from the security provided by my tenant? Tenant-supplied security under a lease can take many forms, including a third party guarantee or indemnity, prepaid rent, a cash deposit, and a letter of credit (an LOC). Crucially, certain forms of security will be more beneficial to a landlord in the face of a tenant bankruptcy, especially where the lease has been disclaimed by the tenant’s trustee in bankruptcy.

This is part three of a series focusing on current M&A trends, opportunities and challenges

In Toronto-Dominion Bank v Canada,¹ the Federal Court of Appeal (FCA) upheld the Federal Court’s decision² that the Toronto-Dominion Bank (TD) was required to pay to the Canada Revenue Agency (CRA) proceeds of $67,854 for unremitted GST that TD received as repayment from a borrower upon the discharge of a TD mortgage.

These are unprecedented and uncertain times. Everywhere, the COVID-19 pandemic has strained revenue streams and asset prices, shaken investor and consumer confidence, and caused overall financial conditions to deteriorate. Everyone is asking the same question: How do we deal with the financial fallout of COVID-19?

In many cases, parties are working together to overcome these financial challenges, preserve value and navigate a mutually beneficial path forward.

Saul Katz and Fred Wilpon, owners of the New York Mets baseball team, invested in Bernard Madoff’s Ponzi scheme. Irving Picard, the trustee appointed under the Securities Investor Protection Act to liquidate the business of Madoff and Madoff Securities, sought to recover over $1 billion from Katz and Wilpon on the grounds that they had made money from Madoff through fraud, constructive fraud and preferential transfers in violation of federal bankruptcy law and New York debtor-creditor law.