Background

Article 4.1 of Council Regulation (EU) No 1346/2000 of 29 May 2000 on Insolvency Proceedings (the "Regulation") states: "Save as otherwise provided in this Regulation, the law applicable to insolvency proceedings and their effects shall be that of the Member State within the territory of which such proceedings are opened..."

Article 4.2 of the Regulation sets out a non-exhaustive list of the matters which the law of the state of the opening of insolvency proceedings is to determine, including:

The government has clarified which claims will benefit from the continued recoverability of CFA success fees and ATE insurance premiums, following its announcement in May last year that there would be a two-year delay to implementation of this aspect of the Jackson reforms for “insolvency proceedings” (see post).

The story of the restructuring of carpet-maker, Brintons has featured in the press recently, with emphasis on the role of Carlyle, one of the world's biggest private equity firms. The facts are similar to the Silentnight pre-pack which we featured in a previous bulletin. In each case, the Pensions Regulator is said to be considering using its anti-avoidance powers under the Pensions Act 2004 to compel senior debt holders to pay towards the deficit of the defined benefit pension scheme operated by the company.

In brief

It is likely that changes to the employer debt regulations (the so-called "section 75 debt" regime) will come into force on 6 April. These will prevent a debt from arising on certain internal group restructurings where there is no weakening of the employer covenant. However, the regulations are highly prescriptive and are, therefore, less attractive as a means of dealing with section 75 debts when compared to apportionment or withdrawal arrangements.

In Butters and ors v BBC Worldwide Ltd and ors, decided on 20 August 2009, the Court held that contractual provisions in a joint venture agreement taken together with termination provisions in a licence of IP rights were void since the effect of those provisions on insolvency was to deprive creditors access to assets and therefore contrary to public policy in the light of insolvency laws.

BUSINESS IMPACT

2013 will herald some significant changes to the UK legal arena, notably in the corporate area in relation to executive remuneration and narrative reporting, in dispute resolution as the Government's reforms to the civil litigation costs and funding regime are due to be implemented and in the energy, real estate and construction areas where there are major changes to the carbon reduction commitment energy efficiency scheme, further amendments to the Community Infrastructure Levy Regulations, the introduction of the Growth and Infrastructure Bill and various amendments to the Building Regula

New Law on "Amendments to the Law on Insolvency (Bankruptcy) and Articles 17 and 223 of the Arbitrage Procedural Code with respect to establishment of special rules for bankruptcy of developers attracting money from participants in construction" was adopted on July 12, 2011 (the "Amendments"). Most of the Amendments were introduced as a special chapter No. 7 named "Bankruptcy of Developers" into the Federal law on Insolvency (Bankruptcy) No. 127-FZ as of 26 October 2002 (as amended) (the "Bankruptcy Law").

The Insolvency Service recently opened a consultation (the "Consultation") on its proposals for a restructuring moratorium. Under the proposals, eligible companies satisfying certain qualifying conditions would be able to apply to court for a moratorium to prevent creditor action (a "Moratorium"). The Moratorium is not intended to be an alternative to formal insolvency for companies that are already insolvent but is intended to support viable companies reach a compromise with their creditors.

In September 2009 we reported on the first instance decision in Butters and ors v BBC Worldwide Ltd and ors, accessible here in which the Court held that contractual provisions in a joint venture agreement taken together with termination provisions in a licence of IP rights were void since the effect of those provisions on insolvency was to deprive creditors' access to assets and therefore contrary