Emergency legislation has introduced important changes to Hungarian insolvency laws that allow the debtor’s business to keep trading during insolvency.

The new rules apply to those debtors who are considered strategically important to the Hungarian economy and to those whose insolvency is declared under other emergency rules.

Scope of Duty

A Hong Kong court has severely criticised the provisional liquidators (PLs) appointed by the court in the company’s place of incorporation in the Cayman Islands, for trying to interfere with the rights of creditors in Hong Kong and to bypass the statutory scheme of winding-up in Hong Kong. In GTI Holdings Limited [2022] HKCFI 2598, the Honourable Madam Justice Linda Chan said it was a matter of concern to see that solicitors and counsel engaged by the PLs in Hong Kong "did not bring home to the provisional liquidators their duties owed to the creditors and to this court".

Cayman Islands companies have dominated the restructuring news cycle of late for a variety of reasons, including recent judicial commentary as to the effect of obtaining recognition under Chapter 15 of the U.S. Bankruptcy Code.

A recent case has highlighted the dangers of the treatment of a Director’s Loan Account (“DLA”), and the risks to directors of trying to re-categorise their DLAs as salary payments. This can mean that the information previously provided to HMRC was incorrect and puts directors at risk of penalties and possibly even a charge of tax evasion.

Conversion of Director’s Loan Accounts to Dividends

Company directors have a number of duties imposed on them under the Companies Act 2006 as well as under common and other laws. Failure to carry out directors’ duties can result in substantial penalties, including personal liability for any losses suffered by the company, its shareholders and its creditors.

As a result of major market changes, business entities more often suspend their operations and become insolvent, during which arises the question of the collectability of the claims of their creditors and associates, as well as persons who are in other relationships with such insolvent business entities.

The legislative framework governing bankruptcy provides partial answers. However, certain questions still remain unanswered in the shining shadow of legal gaps.

In the recent Federal Court case of Abdul Rashid bin Mohamad Isa v PTT International Trading Pte Ltd [2024] MLJU 1518, the core issue that arose in the appeal was whether the withdrawal of the Creditor’s Petition constituted a termination of the entire bankruptcy proceedings including the Bankruptcy Notice served on the Judgment Debtor

BACKGROUND FACTS OF THE CASE

The first half of 2024 saw a number of high-profile insolvencies in the fashion sector including the online retailer Matches Fashion and brands such as The Vampire’s Wife and Roksanda. Indeed Matches was reported to have owed over £35.9 million to various luxury brands, with a low percentage in respect of the amount recovered for supplier brands.

So, what can brands do to guard against retailers and wholesalers in the fashion supply chain becoming insolvent?

Retention of title – Incorporate a robust clause into your sale contracts

This is the second in a series of articles on how the changes introduced by the 2024 JCT (Joint Contracts Tribunal) contracts will impact the practical administration of the JCT contractual mechanisms.

In this article, we look specifically at the insolvency related provisions in the 2024 Design and Build (D&B) contract and the 2024 Intermediate Building Contract with Contractor’s design (ICD) contract. We address the updates to the definition of insolvency, the impact of those changes for Employers and Contractors and the related knock-on impact to sub-contracts.