In the recent English Court of Appeal case of Rubin v Coote, the court allowed a liquidator to settle litigation without having obtained the agreement of all creditors to the compromise.
The Facts
The story of the Silentnight restructuring has featured in the press today. There have been calls for the Pensions Regulator to use its anti-avoidance powers under the Pensions Act 2004 to compel HIG Europe to pay more towards the considerable deficit of the Silentnight Pension Scheme, following the purchase of Silentnight out of administration by the private equity firm last Saturday. Earlier this year, Silentnight had failed to obtain the PPF's approval to a Creditors Voluntary Arrangement aimed at addressing its historic debt, including a pensions deficit of around £100m.
The EAT has confirmed that it is not necessary for the eventual transferee to have been identified in order for an employee, dismissed in the run up to a transfer, to claim automatic unfair dismissal by reason of a relevant transfer under TUPE (Spaceright Europe Ltd v Baillavoine & another).
In its ministerial statement this week in relation to its consultation on the proposals for a restructuring moratorium, the Government has indicated that it now proposes to consider implementing measures to tackle the unreasonable use of termination clauses in insolvencies.
What Are Termination Clauses?
Termination clauses are, of course, found in most commercial agreements and are a means by which a party may terminate an agreement on the occurrence of certain events (invariably including insolvency of the other party).
Introduction
Introduction
Clauses common in syndicated facility agreements were considered and construed in favour of the majority lenders:
-- Strategic Value Master Fund Ltd v Ideal Standard International Acquisition S.A.R.L. (England, High Court, 4 February 2011)
This case involved an examination of clauses common to syndicated facility agreements. The agreement here was based on the LMA standard.
In another case involving administrators, an employment tribunal somewhat controversially has held that the individual administrators could be liable as principals in an agency relationship with employees of a company in administration.
Improved Rights for Unsecured Creditors of Insolvent Companies
In our December 2010 insolvency update, we reported on the UK High Court's decision in BNY Corporate Trustee Services Limited v Eurosail.