Judgment was handed down last week on the substantial directors' duties and wrongful trading claims brought against former directors of various BHS companies^[1].

When Cash is King but it's running short - what do directors need to know?

The general sentiment for 2024 is that challenges still lie ahead for business owners before things will improve. How will those challenges impact your business?

Directors need to be aware that in times of doubtful solvency the law requires them to at least have regard to the interests of creditors as well as shareholders, and getting it wrong can attract significant personal liability.

The Employment (Collective Redundancies and Miscellaneous Provisions) Act 2024 (the “Employment Act”) was signed into law on 9 May 2024 albeit the provisions have not yet commenced. The General Scheme of Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 (the “Companies Bill”) was published in March this year and is expected to be enacted later this year. Both make significant changes to the restructuring and insolvency regime. We will continue to keep you apprised of developments regarding the commencement of the Act.

It’s a tough time for Australian businesses. This is evident by the uplift in insolvencies, approximately 1,100 insolvencies occurred in March 2024 – the highest monthly figure since 2015[1]. Now more than ever, it is crucial for businesses to implement effective debt recovery practices to maximise cashflow.

The market is experiencing almost unprecedented levels of liquidity, across public and private debt and equity capital markets. This is staunching restructuring activity, which might otherwise be expected to rise (not least as pandemic-related government support starts to withdraw). There are also many companies still sponsoring defined benefit pension schemes. The statutory and regulatory landscape in this area has evolved significantly in recent months – with new powers for regulators, and new restructuring tools for debtors.

Since the inception of the Insolvency and Bankruptcy Code, 2016 (“Code“), the debt resolution regime in India has witnessed not only a paradigm shift from the conventional ‘debtor in possession’ to a progressive ‘creditor in control’ but has also undergone a significant transformation, marking a departure from its traditional labyrinthine processes to a more streamlined and effective framework.

We have a direct statutory conflict:

• one statute requires an ERISA dispute to be resolved in arbitration; but
• a bankruptcy statute requires the same dispute to be resolved in bankruptcy.

Which statute should prevail? The bankruptcy statute, of course.

• That’s the conclusion of In re Yellow Corp.[Fn. 1]

Statutory Conflict

The In re Yellow Corp. case presents a direct conflict between these two federal statutes (emphases added):

When does this question tend to arise?

Fund sponsors continue to face a challenging fundraising market and many are sensitive to increasing investor demand for liquidity. Higher interest rates and public market dislocation continue to make capital-raising difficult, while decreased fund distributions are limiting capital available for new commitments, leading investors to prioritize liquidity and invest cautiously.

It is impossible to reflect on the current state of the U.S. economy without recognizing how off the mark recession calls have been since 2022. It was only a year ago that two-thirds of economists regularly polled by Bloomberg expected a U.S. recession within a year. Even today that percentage is still a lofty 30%, though scant evidence of an impending downturn is found in macroeconomic data or in plain sight, notwithstanding the weaker-than-expected advance GDP report for 1Q24. It’s not just economists who have been errant in this call.