The European Union (Preventive Restructuring) Regulations 2021 (the Regulations) were signed into law in Ireland on 27 July 2022. The Regulations provide for the transposition of the mandatory articles of Directive (EU) 2019/1023 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt (the Directive).

Since 1988, the ‘rule in West Mercia’ – so named after the West Mercia Safetywear v Dodd Court of Appeal case – has been the leading authority for when directors of financially stressed companies are subject to the so-called ‘creditor duty’, namely the duty to consider the interests of the company’s creditors.

In both jurisdictions the general consensus was that where a company is insolvent, the fiduciary duty of its directors to act in the interest of the company (Irish law), or in the way they consider, in good faith, would be most likely to promote the success of the company in the interests of its members as a whole (English law), altered such that directors were required to treat creditors' interests in priority to shareholders' interests. Directors must consider the interests of creditors as a whole, and not just the interests of any individual creditor or class of creditors.

On October 14, 2022, the U.S.

Litigation funding continues to be a popular investment vehicle in the UK as the assets available to funders topped £2bn at the start of the decade. Bloomberg has noted that a “flood of money” was moving into the area. This trend appears likely to continue as funders are attracted to litigation as an investment vehicle as economic uncertainty persists and the post-COVID litigation landscape develops.

The amendments follow the recent high profile decision in The Australian Sawmilling Company Pty Ltd (in liq) & Ors v EPA & Anor [2021] VSCA 294 (TASCO Judgment). Insolvency practitioners should be aware that the amendments are aimed at preventing liquidators from disclaiming liability for environmental clean-up costs.

TASCO Judgment

On 5 October 2022, the Supreme Court handed down its long-awaited judgment on the scope of directors’ duties in circumstances where a company is in financial difficulty, often referred to as the “twilight zone” i.e. the company is not yet insolvent but the company’s financial position is precarious. The hope was that the Supreme Court would provide certainty for those directors faced with difficult decisions in such circumstances, however, it is arguable whether the judgment has gone far enough to provide precise guidance.

Summary

引言

英国终审法院最近就 BTI 2014 LLC 诉 Sequana SA 及其他 [2022 UKSC 25] 一案（“Sequana 案”）颁布一份万众期待的判决。Sequana 案的法理将于开曼群岛以至其他普通法司法管辖权区成为极具说服力的法律根据。

Sequana 案是一项有用的判决，原因如下：

• 该案不但确认董事对股东负有受信责任而须真诚以公司最佳利益行事的传统观点，同时指出董事于公司无力偿债或濒临无力偿债或可能进行无力偿债清盘或管理时，须考虑债权人利益或以其行事（“债权人利益责任”）。
• Sequana 为英国终审法院审理的首宗案件裁定董事于哪些情况下必须考虑公司债权人利益，不论债权人利益责任可否于公司无力偿债前触发，以及股东可否认可对债权人利益责任的潜在违反。

背景

Key takeaways for directors

A significant decision of the Supreme Court of the United Kingdom was released last week, BTI 2014 LLC v Sequana SA and others, confirming the existence of a duty owed to the company by its directors to consider the interests of the company's creditors when the company becomes insolvent or approaches insolvency.

As expressed by the Supreme Court, the so-called "creditor duty" reflects a sliding scale:

Lately, the global economic market has been tumultuousMajor changes such as inflation and interest rate hikes may cause individuals or legal entities to fall into the abyss of insolvency. According to the Consumer Debt Clearance Statute and the Bankruptcy Act, if a debtor is unable to repay his/her debts, he/she may clear his/her debts according to the rehabilitation or liquidation process set out by the Consumer Debt ClearanceStatute, or file an application for bankruptcy in accordance with the Bankruptcy Act. Both are procedures to help debtors clear their debts.