28 February 2014
[2014] EWHC 540 (Ch)
Companies Court (Etherton C)

When is a company’s property not its property?

10 February 2014
[2014] EWHC 229 (Ch)
Chancery Division (Etherton C)

A deputy registrar was wrong to dismiss a discharged bankrupt’s annulment application when the only creditor had decided not to prove for its debt.  The deputy register also erred in his approach to the TIB’s application to change the basis of his remuneration.

03 April 2014
[2014] EWCA Civ 383
Court of Appeal (Sullivan, McFarlane and Lewison LJJ)

Further guidance from the Court of Appeal on the meaning of insolvency and the relationship between the cash flow and the balance sheet tests.  A company that can only pay its debts as they fall due by incurring further debt is still insolvent. 

The courts have been busy in recent months considering various schemes of arrangement and reconstructions, including the following 4 unusual and high-profile applications.

In the matter of Co-operative Bank plc

18 December 2013

Companies Court (David Richards J)

[2014] EWHC 4397 (Ch)

The English Cases —Further Extension of UK Scheme of Arrangement for the Benefit of Foreign Companies

London & Westcountry Estates Limited ("LWE") went into administration in March 2012. The directors of LWE claimed that its bankers had mis-sold an interest rate swap product to them, and that they were, as a result, entitled to compensation. As LWE was in administration, it was for the administrators to bring the claim against the bankers. The administrators, however, declined to bring an action on behalf of LWE, and also declined to assign the cause of action to the directors.

One of the recent hot topics in the European restructuring market has been whether the UK Courts would sanction a scheme of arrangement in relation to a foreign company, with no previous connection to the UK whatsoever, where the sole basis for establishing jurisdiction to undertake the scheme would be amending the governing law and jurisdiction clauses of the company’s principal finance documents to English law.

Key point

When assessing if a company is insolvent on the "cash-flow" basis, the Court will consider not only whether a company manages to meet its debts as they fall due but also how a company does so. A company meeting its debts simply by increasing longer-term debt, will likely be held to be insolvent.

The facts

The recent case of APCOA Parking1 has set a precedent by allowing yet more non-English incorporated debtors to implement financial and corporate restructurings using English schemes of arrangement.

Restrictive covenant - if in doubt, lender should be notified; the costs risk of insolvency proceedings; interim payments; service of claim form; Wragge & Co's banking and finance experts bring you the latest on the cases and issues affecting the lending industry.

Restrictive covenant - if in doubt, lender should be notified