In what is likely to be the most significant change to the UK restructuring and insolvency market since the Enterprise Act 2002, the Court has yesterday1 paved the way for restructuring plans under Part 26A to the Companies Act 2006 ("RPs") to be used to compromise the rights of landlords, financial creditors and other unsecured creditors provided the company shows that those creditors are "out of the money". There may even be no need to ask those compromised creditors to vote on the RP.
The High Court has dismissed a strike out application in respect of a claim brought under section 423 of the Insolvency Act 1986 (“IA 1986”) in respect of an alleged transaction defrauding creditors, holding that it is not necessary to prove a freestanding connection between the defendant and England, separate from the litigation itself, in order to obtain relief: Suppipat v Narongdej [2020] EWHC 3191 (Comm).
The Government on 20 May 2020 published the Corporate Insolvency and Governance Bill, which contains the most far-reaching reforms to UK insolvency law in over 30 years. The Bill has been introduced on an emergency basis in an attempt to ensure that otherwise financially viable companies survive during a period of unprecedented interruption and turmoil.
In Arlington Infrastructure Ltd (In administration) and another v Woolrych and others [2020] EWHC 3123 (Ch), the Court considered the meaning of a deed of priority entered into between the senior and junior secured creditors of Arlington Infrastructure Limited (AIL). The junior creditors (but not the senior creditor) also held debentures over AIL's subsidiary companies.
The German Federal Court of Justice has tightened its grip on company directors again. In a recent judgment on directors’ liability in insolvency situations, the Court clarified the scope of sections 60- 61 of the German Insolvency Act.
The UK government announced on 26 August 2018 that it will legislate to update the restructuring and insolvency systems, with the aim of the UK retaining the gold standard regime. The reforms are a response to international developments (with countries such as Spain and the Netherlands recently introducing updated insolvency systems) and some domestic corporate collapses which have put the UK system under stress.
The reforms are wide-ranging. Headline changes will include:
Key points
Failure to comply with sections 333 and 363 of the Insolvency Act constitutes contempt of court for which a committal order may be obtained.
A trustee in bankruptcy should not usually require permission to apply for a committal order.
Correct procedure for application confirmed by the court.
Ivey v Crockfords (2017 UKSC 67)
Whilst this is not a trust related case, it is an important one which may have an impact on the trust industry going forward as it sees the Supreme Court fundamentally change the test for dishonesty in English law.
Key Points
- Statutory powers are to be exercised in accordance with a company’s articles of association
- The Duomatic principle cannot simply be used as a bandage to cure a company’s procedural errors
The Facts
This appeal considered whether the sole director of a company, whose articles required two directors for its board meeting to be quorate, could validly appoint administrators under paragraph 22 Schedule B1 of the Insolvency Act 1986.
The recent decisions in Re MF Global UK Ltd and Re Omni Trustees Ltd give conflicting views as to whether section 236 of the Insolvency Act 1986 has extra-territorial effect. In this article, we look at the reasoning in the two judgments and discuss a possible further argument for extra-territorial effect.
The conflicting rulings on section 236