On 5 October 2022 a judgment was handed down by the Supreme Court in the case of BTI 2014 LLC v Sequana SA (Sequana) and others.This judgment relates to an insolvency dispute between BTI, the assignee of AWA’s claims, and Sequana. Principally, it concerns which entity should make the payment for an outstanding liability incurred by AWA, arising out of the National Cash Register Company’s (NCR) pollution of the Fox River in Wisconsin. Through a series of restructurings, AWA became liable to indemnify British American Tobacco (BAT) for these costs.

Retired U.S. Bankruptcy Judge Robert E. Gerber once observed that “issues as to the interplay between environmental law and bankruptcy are among the thorniest on the litigation map.” Difficulties navigating this interplay largely stem from the inherent conflict between the goals of bankruptcy and environmental laws, with the former aimed at providing debtors with a fresh start, while the latter cast a broad net to hold parties (even some innocent parties) responsible for past harm to the environment.

Overview

At the COP26 climate summit in November 2021, over forty countries committed to phase out use of coal-fired power.

In March 2019, Liquidators were appointed to The Australian Sawmilling Company Pty Ltd (TASCO) by way of a creditors’ voluntary winding up. TASCO owned a large lot of contaminated land – there were stockpiles of construction and demolition waste resulting from a former licensee conducting a materials recycling business.

This week’s TGIF focuses on The Australian Sawmilling Company Pty Ltd (in liq) v Environment Protection Authority [2021] VSCA 294 in which the Court set aside a disclaimer of onerous property, such that liquidators were held liable under environment protection legislation.

Key Takeaways

Environment, social, and governance (ESG) are factors directors, investors, industries, and governments increasingly focus on when making commercial decisions. This is particularly so given increasing public awareness of such issues following recurrent environmental disasters and international summits such as COP26. Tim Symes and Ryan Hooton review the current regulatory environment in the UK, how it might bite on a company’s insolvency and when directors may find themselves personally liable for their actions.

This month sees a statement by the Charity Commission on the Ukraine crisis and how this impacts charities, and a factsheet released by the UK government on the impact the war has had on energy.

There are also some very interesting articles regarding support for domestic abuse victims to how to deal with Social Housing complaints.

Finally there is a press article on TLT’s involvement in the innovative second modular deal for Town and Country Housing and Legal and General Modular Homes.

Considerations of “environmental, social and governance” (or ESG) criteria with respect to a company’s management and operations continue to take on greater importance in lenders’ and investors’ credit and investment decisions. How a borrower or a target company measures up to these ever-developing ESG standards will impact its cost of capital and value to potential investors and acquirors.

In the construction sector solid cash flow throughout the supply chain is the lifeblood of most projects, no matter what size, and is arguably the single most important factor in ensuring that a project reaches its conclusion. However, the cumulative effect of various other factors such as Brexit, escalating global energy prices, the outlawing from 1 April 2022 of the use of the red diesel usage for construction plant, super inflation, higher material and labour costs and the end of government COVID-19 support schemes has led to increased lending costs and smaller profit margins.