Under German law, company directors have a statutory duty to file for insolvency once the company has become insolvent or over-indebted. Company directors can be held personally liable for any payments they make after that point of time unless they prove that they exercised reasonable care, skill and diligence. After the German Federal Court of Justice (Bundesgerichtshof) clarified that standard terms and conditions of German D&O insurance contracts cover this directors’ liability, many D&O insurers have tried to find new ways to avoid their coverage.

Bed Bath & Beyond, the home goods retailer, has filed bankruptcy under Chapter 11 and plans to conduct liquidation sales and close all of its brick-and-mortar stores by June 30, as reported by The New York Times. The retailer points to an inability to adjust to the growth of online shopping as a reason for its downfall.

The United Kingdom Supreme Court has just released an important insolvency judgment in BTI 2014 LLC v Sequana SA [2022] UKSC 25 (Sequana), which concerns when and the extent to which directors of a company must consider the interests of creditors.

The United Kingdom Supreme Court has just released an important insolvency judgment in BTI 2014 LLC v Sequana SA [2022] UKSC 25 (Sequana), which concerns when and the extent to which directors of a company must consider the interests of creditors.

The High Court has handed down the most significant decision on restructuring plans since Virgin Active in 2021, applying cross-class cram down to an ad hoc group of dissenting noteholders (the AHG).

Background

The Dutch Supreme Court ruled that "setting aside" or replacing the board is not a requirement to qualify as a de facto director. De facto directors are not required to manage the company instead of, and to the exclusion of, the formal directors.

Background

Under Dutch law, as a matter of principle, only the company (ie a Dutch B.V. or N.V.) is liable for its debts. The directors of the company are in principle not liable.

The High Court has clarified the grounds for challenging a CVA for guarantee creditors.

Background

The German Federal Court (BGH) has confirmed that section 166 of the German Insolvency Code (InsO) does not provide the administrator with a right to use or realise secured assets for the benefit of the insolvency estate other than movable assets or claims assigned by way of security.

Background

Under section 166 InsO an insolvency administrator may realise a movable asset in which a right to separate satisfaction exists if it is in the administrator's possession. The same applies to claims assigned by way of security.

The High Court has clarified the grounds for challenging a CVA for guarantee creditors.

Background

Mizen Design/Build Ltd's (Mizen) directors proposed a CVA stating that this would lead to a better result for unsecured creditors than the likely alternative, administration.

The CVA compromised guarantee creditors' ability both to bring a claim against Mizen and to call upon their performance guarantees against Mizen's parent company (the Parent Guarantor).

Highlights

The Supreme Court held Section 363(m) is only a “statutory limitation” to accessing appellate relief in disputed bankruptcy sales that requires parties to take certain procedural steps to be effective

The Supreme Court also addressed mootness arguments and held that as long as parties have a concrete interest, however small, in the outcome of an appeal, the appeal should remain alive

The ruling provides insight as to how the Supreme Court may tackle the controversial doctrine of “equitable mootness”