Major insolvency reform: Getting the (ipso) factos straight
In brief
In Paul David Wood & Anor v Timothy Darren Baker & Ors, the joint trustees in bankruptcy of the bankrupt's property successfully obtained injunctions freezing the assets and business of the respondents and restraining them from dealing with such assets and business. This case is an illustration of how the court may apply the "evasion principle", a principle identified in the decision of the Supreme Court in the case of Prest v Petrodel Resources Ltd, in piercing the corporate veil.
Background
In a recent decision, the High Court held that legal advice taken in relation to certain transactions was not protected by privilege, as there was prima facie evidence that the purpose of the advice was to structure the transactions in a way that avoided the client’s liability to pay local authority care charges and/or as a transaction defrauding creditors: London Borough of Brent v Kane [2014] EWHC 4564 (Ch).
Independent experts have become increasingly nervous on independence and process points since the Australian Securities and Investments Commission (ASIC) required a replacement independent expert in Billabong, apparently based on independence concerns raised by ASIC in that case.
Act 38/2011, of 10 October, which reforms the former Spanish Insolvency Act, introduces a number of measures, including the possibility of obtaining court approval for refinancing agreements meeting certain requirements to extend the agreed debt rescheduling to certain creditors that have either opposed the refinancing agreement (i.e. dissident creditors), or that have not participated in it.
Additional Provision 4 of the Insolvency Act establishes that court approval for refinancing agreements may be sought by the debtor if they meet the following conditions:
The Court of Appeal has held that a settlement agreement between a bank and a group of companies which included releases of the parties’ affiliates prevented the companies from later pursuing claims against their own affiliates. Those affiliates were held to include former administrators appointed by the bank and the administrators’ solicitors: Schofield v Smith [2022] EWCA Civ 824.
In Ristorante Limited T/A Bar Massimo v Zurich Insurance Plc [2021] EWHC 2538 (Ch), the Court considered the interpretation and legal effect of a question asked by an insurer to a prospective insured around prior insolvency issues. The insured agreed with the insurer’s question, as framed, that there were no prior insolvency issues. Insurers failed in their attempt to avoid the policy for breach of the duty of fair presentation based on alleged misrepresentation. Insolvency events in relation to other companies did not need to be disclosed.
Initial arrangements have been put in place for mutual recognition and assistance to be provided by courts in Mainland China and Hong Kong in respect of corporate insolvency proceedings. This is a significant and long awaited development which could substantially enhance the ability for cross border insolvencies and restructurings to be administered and implemented across the two jurisdictions.
Background and purpose of the proposals
On 8th January proposals for a new ‘Prepackaged Insolvency Resolution Process’ ("PIRP") were issued by the Indian Ministry of Corporate Affairs for public consultation, and we have considered them from a foreign perspective.
The proposals are continuing evidence of the Indian Government’s admirable ongoing commitment to swift further development and improvement of the insolvency framework that was introduced five years ago in the Insolvency and Bankruptcy Code (“IBC”).
The Australian Federal Government has announced significant insolvency law reforms that will affect small businesses with liabilities of less than $1 million. The reforms are expected to commence on 1 January 2021 and will introduce, among other measures, a new debt restructuring process and liquidation pathway for small businesses which the Government intends to be simpler, more flexible and more efficient than existing processes.
In brief