The UK water industry is rarely out of the headlines, whether for operational performance issues or reports of perpetual financial distress. It may therefore be more than a coincidence that the UK government has chosen now to introduce new rules for the special administration regime (SAR) that applies to water companies.

Occasionally an invoice slips through the net and does not get paid, or payment is delayed due to issues with the goods or services being provided.

Where the debt is for £750 or more, an impatient creditor may serve a statutory demand or a winding up petition if it considers there to be no reason for the delay.

If this happens, deal with the situation immediately as the consequences of failing to do so can be very damaging to the company's reputation and finances; even if it is not ultimately wound up.

Unless you’ve been living under a rock, you’ll know that commodity prices are in the doldrums and that the outlook in the near term is not particularly positive. How should Boards prepare? Combine that with current inflation, interest rate and other cost of living pressures that continue to dominate public discourse and you can understand why many Boards and executives in the resources sector are having some sleepless nights. FY24 is also on track to have more insolvencies than FY23. By December FY24 insolvency activity was up 33.79% on the same time in FY23.

Businesses often rely on trade credit insurance to protect themselves from customers’ inability to pay for products or services. An interesting question that arose recently in the Indian insolvency context was that when a creditor’s claim for pending dues is paid out by an insurer, can the creditor, having received such pay-out, maintain an insolvency action against the debtor? The National Company Law Tribunal (“NCLAT”) has answered this in the affirmative.

The latest government insolvency statistics highlight that the downturn in the UK economy is still taking a significant toll and the number of UK corporate insolvencies in February 2024 remains high (and 17% higher compared to February 2023).

Latest insolvency statistics

February 2024 saw 2,102 company insolvencies, the highest February figures for at least four years.

The Singapore International Commercial Court ("SICC") has handed down its first insolvency-related ruling. The court granted recognition and full force and effect to Indonesia's flagship airline's restructuring plan. That plan had been approved in accordance with Indonesian law. In granting recognition to the Indonesian plan under Singapore's version of the UNCITRAL Model Law on Cross-Border Insolvency, the SICC overruled objections to recognition from aircraft lessors.

General

As a general rule, Law No. 37 of 2004 on Bankruptcy and Delay of Payment (“Law No. 37/2004”) provides that a delay of payment of petition should be granted by the relevant commercial court’s judges if it meets the following requirements:

a. The debtor has two or more creditors; and

b. At least one of the debts is due and payable.

Austria implemented Directive (EU) 2019/1023 on preventive restructuring frameworks with the Restructuring Regulation, which came into force on July 17, 2021, and introduced (further) judicial proceedings for preventive restructuring. Practice, however, has shown that the reorganization plan in insolvency proceedings and out-of-court restructuring remain the methods of choice in Austria.

The preamble of the Insolvency and Bankruptcy Code, 2016 (‘Code’) states its objectives, which are maximisation of value of assets, promote entrepreneurship, within the stipulate time frame. Apart from the initiation of Corporate Insolvency Resolution Professional (‘CIRP’) or the Liquidation Process, the Code also provides for a class of transactions which can be ‘avoided’ or ‘undone’ by the appointed Resolution Professional (‘RP’) or the Liquidator, by preferring an Application before the Adjudicating Authority.

For industry professionals in India, the Insolvency and Bankruptcy Code (IBC), 2016, has been a game-changer. The introduction of a formal framework for insolvency resolution has brought much-needed clarity and efficiency to dealing with financial distress. However, the 2019 Regulations introduced a new dimension - the ability for personal guarantors (PGs) to initiate insolvency proceedings. This has significantly impacted the role of Resolution Professionals (RPs).