The English High Court has recently delivered judgment in the IMO Car Wash case (In the matter of Bluebrook Ltd and others [2009] EWHC 2114 (Ch)), in which the High Court considered whether to sanction three related schemes of arrangement for restructuring indebtedness proposed by the IMO Car Wash group to the senior lenders of the relevant group companies.  

Background

• Consultation ends September 7 2009
• Likely to re-ignite controversy over 'pre-pack' administrations

New proposals by the Government to improve access to rescue finance for small companies would allow larger or complex businesses to make private applications to the courts for an "administration-type" regime without creditors necessarily knowing. Proposals in the same consultation on lending to insolvent companies could drive up the cost of borrowing, says Reynolds Porter Chamberlain LLP (RPC), the City law firm.

In the case of William Hare Ltd v Shepherd Construction Ltd [2009] EWHC 1603 (TCC) (25 June 2009), the court declined to incorporate amendments made to an Act before the contract was signed which were not specifically referred to in the contract.

The facts

In Butters and ors v BBC Worldwide Ltd and ors, decided on 20 August 2009, the Court held that contractual provisions in a joint venture agreement taken together with termination provisions in a licence of IP rights were void since the effect of those provisions on insolvency was to deprive creditors access to assets and therefore contrary to public policy in the light of insolvency laws.

BUSINESS IMPACT

The Court of Appeal has heard the appeal in Oakland v Wellswood (Yorkshire) Ltd. Although its written judgment has not yet been published, it appears that it heard an appeal only on a narrow point of employment law and did not give definitive guidance on the application of the insolvency provisions in the TUPE Regulations which had been the principal issue in the EAT.

Introduction

The High Court1 in England has confirmed the validity under English law of contractual provisions common in structured finance transactions which subordinate payments to a swap counterparty in circumstances where the swap counterparty has defaulted on its obligations under the terms of the relevant swap agreement.

The Judgment

Parties

On July 14, 2009, the Joint Administrators of Lehman Brothers International (Europe) ("LBIE"), made an application to the High Court in London with respect to a Scheme of Arrangement (the "Scheme") (the UK administration’s analogue to a Chapter 11 plan of reorganization) designed to provide procedures to be used by LBIE for the purpose of returning so-called “trust property” held by LBIE to certain of its customers (“Creditors”). Among the primary purposes of the Scheme is the desire to avoid the need for a case-by-case resolution of the claims made by LBIE's Creditors.

To avoid an asset reverting to a bankrupt after the end of his period of bankruptcy, the asset must be realised. An assignment of a beneficial interest for a future price does not amount to a realisation.

InDornoch Ltd & Ors v Westminster International & Ors [2009] EWHC 1782 (Admiralty) Mr Justice Tomlinson held that the sale by Westminster International (Westminster) of the wreck of a vessel, the Fariway for the sum of 1000 Euros to a related company was a transaction at an undervalue under s423 of the Insolvency Act 1986 (which, in basic terms, provides that certain disposals made to connected persons for a value less than a fair value may be set aside by the court).

In Josef Syska (Administrator of Elektrim SA (in bankruptcy) and Elektrim SA (in bankruptcy) v Vivendi Universal SA & Others [2009] EWCA Civ 677 the main question to be decided by the Court of Appeal was whether, when an arbitration is proceeding in one Member State of the European Union, in this case the UK, and one of the parties to the arbitration becomes insolvent in another Member State, in this case Poland, the consequences of that insolvency, in so far as they affect the arbitration, are to be determined by the law of the Member State where the insolvency procee