There have been a string of high-profile celebrity bankruptcies over the decades, and most recently, Katie Price. A common theme among these celebrities, many of whom were former contestants on the ITV hit show “I’m a Celebrity,” is that they were bankrupted by HMRC for unpaid taxes.
It’s not the first occasion that a major serviced office provider has landed in a corporate restructuring but it may be the most high-profile. The current evolving situation follows on from such previous fireworks as the failed IPO, a corporate reorganisation that swapped a US headco “inc.“ for an “LLC” (prompting litigation at the end of the last decade), and continuing market uncertainty as to the robustness of the brand.
UK members will want to monitor the situation and prepare for contingencies as US company experiences financial difficulties
On Monday 7 November 2023 WeWork Inc. filed for Chapter 11 bankruptcy in respect of its US business, and intends to file for recognition of those proceedings in Canada.
The Bombay High Court recently quashed a provision of a central government office memorandum that enabled public sector banks to request issuance of look out circulars (LoCs) against wilful defaulters. In Viraj Chetan Shah v Union of India, the court held that this provision violated the fundamental right to life (Article 21) as well as the fundamental right to equality (Article 14). The government is reportedly contemplating a statutory basis for PSBs to initiate LoCs.
In the recent case of Mitchell v Al Jaber [2024] EWCA Civ 423, the Court of Appeal confirmed that a shareholder and director may still be subject to a fiduciary duty when purporting to transfer company property, even after the company enters liquidation. The decision was made in relation to British Virgin Island (BVI) law, but on the basis of English case authorities.
Background
Introduction
In a recent article we considered the nature and extent of directors’ duties to take into account the interests of a company’s creditors when a company is in financial difficulty. A recent High Court decision (Mitchell & Krys v Al Jaber & ors [2023] EWHC 364 (Ch)) considered the issue of directors’ duties in the subsequent situation where a company has entered liquidation. Whilst the relevant company was based in the British Virgin Islands (BVI), the case includes analysis of the position in English law.
Key Points
In the majority of surveyed deals (55%), Sponsor-backed IPO companies availed themselves of at least some “controlled company” exemptions available under applicable listing requirements, which, among other things, exempt such companies from certain board and committee director independence requirements (other than with respect to the audit committee).
On January 16, 2019, Gymboree Group, Inc. and 10 affiliated debtors (collectively, "Debtors" or "Gymboree") filed chapter 11 in the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division). On January 17, 2019, Gymboree, Inc. commenced a parallel proceeding in Canada under subsection 50.4(a) of the Bankruptcy and Insolvency Act (Canada).