CVAs remain the restructuring tool of choice for businesses with multi-let properties. Since the start of the first UK lockdown, there has been a marked increase in the number of CVAs in the hospitality and retail sectors. Whilst vaccines are now being dispensed, the economic ramifications of the pandemic will persist for some time to come and as a result we expect to see many more CVAs being proposed, particularly in these sectors. The introduction of R3's Standard Form COVID-19 CVA Proposal could lead to an increase in the use of CVAs in the SME market too.
Apperley Investments Limited & Others v Monsoon Accessorize Limited [2020] IEHC 523
The Commercial Court has refused to apply the provisions of a Company Voluntary Arrangement (“CVA”), negotiated pursuant to the Insolvency Act 1986 in the UK, to Irish landlords as it would be “manifestly contrary to the public policy of the State”.
These proceedings were taken by Irish landlords over properties in Dublin and Cork leased to the fashion retailer Monsoon.
The UK’s reformed restructuring regime shows its force with the first successful cross-class cram-down following the introduction of the new restructuring plan. A quick legal update on the key features of the restructuring plan and the analysis of the recent cases can be found in the infographic below.
Contributors to this update were Howard Morris, Amrit Khosa, Jai Mudhar, Joe Donaghey, and Haania Amir.
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).
In light of a number of recent High Court decisions, Andy Creer considers the approach of the Court when considering an application for a speedy trial.
At the end of March, the Government introduced measures providing a moratorium on evictions for commercial tenants for non-payment of rent until 30 June 2020.
A demerger is the process through which a single business entity is divided into separate companies or groups of companies. There are a number of motivations behind a demerger, such as resolving shareholder disputes, separating different elements of a business and improving the value of an element of a single business that has previously been eclipsed within the current corporate structure. On account of the rigid legislation governing companies within the UK, it is vital that the correct methodology for carrying out a demerger is used.
As COVID-19 related economic disruptions place unprecedented stress on cash flows, the risk of insolvency is a new and growing concern for many businesses. Against the backdrop of a decades-long growth in corporate debt, boards of directors are making decisions that have the potential for pitting the interests of creditors against the interests of equity shareholders.
Recent Developments
The highly anticipated Supreme Court decision in Bresco Electrical Services Ltd (in Liquidation) v Michael J Lonsdale [2020] UKSC 25 has endorsed the use of adjudication in the context of insolvency set off, substantially reversing the decision of the Court of Appeal.