This article originally appeared in Vol. 52 of Kentucky Trucker, a publication of the Kentucky Trucking Association.

Many businesses continue to experience unprecedented pressure on their cash flow given, among other things, the continued fall-out from the global pandemic, the war in Ukraine, the cost of living crisis, rising interest rates, the end of cheap debt and the expected global downturn.

To mitigate their exposure to personal liability, it's important that directors of insolvent companies or companies in the zone of insolvency comply with their duties to act in the best interests of the company as a whole. This includes the interests of creditors as a whole.

The Dutch Supreme Court ruled that "setting aside" or replacing the board is not a requirement to qualify as a de facto director. De facto directors are not required to manage the company instead of, and to the exclusion of, the formal directors.

Background

Under Dutch law, as a matter of principle, only the company (ie a Dutch B.V. or N.V.) is liable for its debts. The directors of the company are in principle not liable.

This Quickguide explains the two most common forms to bring a solvent company's life to an end and explains the processes involved in each, as well as in which circumstance which option may be best suited.

Strike-off or members' voluntary liquidation?

When a company has fulfilled its economic purpose or a group of companies wishes to consolidate its structure, there are two main options available to bring a solvent company to an end:

Sova Capital Ltd (“Sova”) was an FCA authorised and regulated broker. Before it went into Special Administration, Sova provided investment brokerage services to institutional and corporate clients, mostly trading in the Russian market.

Every secured lender hates to hear it: Yet another statutory scheme could potentially cause the lender to lose its first priority security interest in certain collateral. While the Perishable Agricultural Commodities Act (PACA) has been around since 1930, it is often forgotten or overlooked by many lenders. However, to the extent that a lender's collateral includes perishable agricultural commodities, such as when the borrower is a restaurant or grocery store, PACA can present significant risks for a lender.

PACA Basics

In the latest ground breaking decision in Re Guy Kwok-hung Lam[2023] HKCFA 9, the Court of Final Appeal dismissed the appeal and laid to rest a long-standing debate on the vexing question concerning the impact, if any, exclusive jurisdiction clauses (EJCs) have on the presentation of bankruptcy petitions.

The High Court has handed down the most significant decision on restructuring plans since Virgin Active in 2021, applying cross-class cram down to an ad hoc group of dissenting noteholders (the AHG).

Background

The insolvency statistics released for March 2023 demonstrate the impact of turbulent trading climates on UK businesses, in particular soaring costs and decreased consumer spending.

The March 2023 insolvency statistics show that UK corporate insolvencies have risen 16% year-on-year and 38% since February 2023.

The High Court refused to sanction the restructuring plan put forward by Nasmyth Group Limited (Nasmyth) pursuant to Part 26A of the Companies Act 2006 on 28 April 2023, despite both statutory conditions for cross-class cram down having been met.

Meanwhile, judgment is awaited in respect of the restructuring plan put forward by The Great Annual Savings Company Limited (GAS), which was proceeding simultaneously to Nasmyth and which also seeks to cram down HMRC.