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    BTI v Sequana - what the Supreme Court judgment means for directors' duties
    2022-10-06

    The long awaited Sequana Supreme Court judgment[1] has provided some welcome clarity around the duties of the directors of a company in the "twilight zone" – i.e. where the company is facing financial difficulties.

    Filed under:
    United Kingdom, Company & Commercial, Insolvency & Restructuring, Litigation, Travers Smith LLP, Insolvency
    Authors:
    Edward Smith , Kirsty Emery
    Location:
    United Kingdom
    Firm:
    Travers Smith LLP
    Directors must be cautious of the Supreme Court’s decision in BTI v Sequana
    2022-10-06

    A recent Supreme Court decision serves as a reminder for directors to take specialist legal advice at an early stage to avoid potential liability

    Managing a company’s business and making strategic and operational decisions is increasingly the subject of considerable internal and external pressures.

    Filed under:
    United Kingdom, Company & Commercial, Insolvency & Restructuring, Litigation, Weightmans LLP, Supply chain, Coronavirus, Insolvency
    Authors:
    Shevy Narendra
    Location:
    United Kingdom
    Firm:
    Weightmans LLP
    Debtors and dumping: lessons for Insolvency Practitioners and environmental litigators
    2022-10-06

    On 5 October 2022 a judgment was handed down by the Supreme Court in the case of BTI 2014 LLC v Sequana SA (Sequana) and others.This judgment relates to an insolvency dispute between BTI, the assignee of AWA’s claims, and Sequana. Principally, it concerns which entity should make the payment for an outstanding liability incurred by AWA, arising out of the National Cash Register Company’s (NCR) pollution of the Fox River in Wisconsin. Through a series of restructurings, AWA became liable to indemnify British American Tobacco (BAT) for these costs.

    Filed under:
    USA, Environment & Climate Change, Insolvency & Restructuring, Litigation, Hausfeld LLP, Insolvency, US Environmental Protection Agency, Supreme Court of the United States, UK Supreme Court
    Authors:
    Sarah Moore
    Location:
    USA
    Firm:
    Hausfeld LLP
    Supreme Court holds that a creditor’s interest duty exists, what its content is and when it is engaged
    2022-10-06

    Summary

    The Supreme Court held that when directors know, or ought to know, that the company is insolvent or bordering on insolvency, or that an insolvent liquidation or administration is probable, they must consider the interests of creditors, balancing them against the interests of shareholders where they may conflict. The greater the company’s financial difficulties, the more the directors should prioritise the interests of creditors.

    Background

    Filed under:
    United Kingdom, Company & Commercial, Insolvency & Restructuring, Litigation, Freshfields Bruckhaus Deringer, Insolvency
    Authors:
    Ken Baird , Katharina Crinson
    Location:
    United Kingdom
    Firm:
    Freshfields Bruckhaus Deringer
    What does today's Sequana decision mean for directors?
    2022-10-05

    Background

    On 5 October 2022, the Supreme Court handed down its long-awaited judgment in BTI 2014 LLC v. Sequana S.A. [2022] UKSC 25 concerning the trigger point at which directors must have regard to the interests of creditors pursuant to s.172(3) of the Companies Act 2006 (the "creditors' interests duty").

    Filed under:
    European Union, United Kingdom, Insolvency & Restructuring, Litigation, Public, Dentons, Brexit, Supply chain, Coronavirus, Insolvency, UK Supreme Court
    Authors:
    Tessa Blank , Neil Griffiths , Luci Mitchell-Fry , Ian Fox , Celia Hayward , Richard Pallot-Cook
    Location:
    European Union, United Kingdom
    Firm:
    Dentons
    SEQUANA: UK Supreme Court Explanation of the “Creditor Duty”
    2022-10-05

    Introduction

    Today, the UK Supreme Court considered for the first time the existence, content and engagement of the so-called “creditor duty”: the alleged duty of a company’s directors to consider, or to act in accordance with, the interests of the company’s creditors when the company becomes insolvent, or when it approaches, or is at real risk of, insolvency.

    Filed under:
    United Kingdom, Company & Commercial, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Insolvency, UK Supreme Court
    Authors:
    Andrew Wilkinson , Neil Devaney , Matt Benson , Jenny Davidson , Lois Deasey , Mark Lawford , Gemma Sage , Lindsay Merritt , Maeve Brady , Natasha Ayres , Mahereen Nawaz
    Location:
    United Kingdom
    Firm:
    Weil Gotshal & Manges LLP
    Supreme Court Confirms That Creditor Duty Engaged When Company is Bordering on Insolvency
    2022-10-05

    Following a long wait of 18 months, the Supreme Court has today confirmed that the appeal of the decision in BTI –v- Sequana is unanimously dismissed.

    The key question that many of us have been waiting for the answer to is: Does the creditor duty set out in s172(3) of the Companies Act 2006 exist and if so, when is it engaged?

    Filed under:
    United Kingdom, Insolvency & Restructuring, Litigation, Squire Patton Boggs, Insolvency, Supreme Court of the United States
    Authors:
    Rachael Markham
    Location:
    United Kingdom
    Firm:
    Squire Patton Boggs
    Are funds deposited into an attorney’s trust account immune from impeachment under South African insolvency laws?
    2022-10-05

    It is axiomatic – at least as a prima facie proposition – that insolvency is only concerned about assets which belong to the insolvent when the insolvency commences (or, as it is often said when a concursus creditorum is established on the commencement of insolvency). South African insolvency law respects property rights which have accrued under our law prior to the commencement of insolvency proceedings, including security interests such as mortgages, liens and cessions.

    Filed under:
    South Africa, Insolvency & Restructuring, Litigation, Fasken, Insolvency
    Authors:
    Lillian Mello , Haroon Y Laher
    Location:
    South Africa
    Firm:
    Fasken
    Creditor Duty - the position after the Supreme Court decision in BTI v Sequana and Others
    2022-10-05

    The Supreme Court’s decision in BTI v Sequana & Others represents the most significant ruling on the duties of directors of distressed companies of the past 30 years.

    This Supreme Court decision considers the balancing exercise which directors are required to carry out between the respective interests of creditors and shareholders when a company is in financial distress.

    This note summarises the key points from the ruling and the practical effect of this decision.

    Filed under:
    United Kingdom, Insolvency & Restructuring, Litigation, Hogan Lovells, Insolvency, Supreme Court of the United States
    Authors:
    Kevin Lloyd , Richard Lawton , Ardil Salem
    Location:
    United Kingdom
    Firm:
    Hogan Lovells
    Supreme Court Confirms Creditors Duty For Directors
    2022-10-05

    The Supreme Court's judgment in BTI v Sequana is long-awaited, and welcome. The court has confirmed that directors do have a common law creditors' duty, and that it works on a sliding scale basis.

    Filed under:
    United Kingdom, Insolvency & Restructuring, Litigation, Ashurst, Insolvency, UK Supreme Court
    Location:
    United Kingdom
    Firm:
    Ashurst

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