In Stephen John Hunt (Liquidator of Marylebone Warwick Balfour Management Ltd) v Richard Balfour-Lynn and others [2022] EWHC 784 (Ch), the High Court decided that the directors of a company which went into liquidation after participating in an ineffective tax avoidance scheme did not breach their fiduciary duties and payments made pursuant to the scheme were not transactions defrauding creditors.
Background
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").
In Re Unity Group Holdings International Ltd [2022] HKCFI 3419, the Hong Kong court has for the first time sanctioned a scheme of arrangement that releases debts of third-party obligors that were guaranteed by the scheme company without requiring a deed of contribution. The Honourable Mr. Justice Harris deviated from the English law approach and ruled that a deed of contribution will no longer be necessary for the release of a principal obligor's liability that has been guaranteed by the scheme company.
A going concern
Key takeaways
In BTI 2014 LLC v Sequana SA and others,1 the UK Supreme Court considered for the first time the existence, content and triggers of the obligation on directors to have regard to the interests of creditors when a company becomes insolvent or is bordering on insolvency (the Creditor Duty).
This decision addresses important issues for directors, stakeholders, and advisors of UK companies.
Background
The 11 October 50-page judgment of Hildyard J in The joint administrators of Lehman Brothers International (Europe) v FR Acquisitions Corporation (Europe) and JFB Firth Rixson will interest not only those who deal with ISDA Master Agreements (who may want to read the entire judgment), but also many lawyers and financial and commercial institutions. This is because the events of default which it had to consider, and especially the meaning of the word “continuing” in this context, are relevant to bonds, loans and various commercial contracts.
Understanding limitation periods are of crucial importance in the construction industry, particularly when a contractor is faced with unpaid invoices for services or materials rendered. The Ontario Court of Appeal stepped back into the spotlight in this regard with its decision in Thermal Exchange Service Inc. v Metropolitan Toronto Condominium Corporation No. 1289, 2022 ONCA 186, in holding that a defendant's assurances may prolong the "discoverability" of a claim for non-payment.
Background
What Happened
In Short
The Situation: Directors in England and Wales owe duties to the companies to which they are appointed (and may face personal liability for breaching such duties). Although the Companies Act 2006 obliges directors to maximise value for a company's shareholders, case law has suggested that directors should act in the interests of a company's creditors if a company becomes distressed.
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).