The suspension of wrongful trading under the Corporate Governance and Insolvency Act 2020 was introduced to allow directors to trade during the pandemic without the unwanted distraction of potential liability. This article considers whether that objective is likely to be achieved in circumstances where there has been no modification to the common law rules governing duties owed to creditors, and in light of the Court’s power to award compensation in disqualification proceedings.
Introduction
Dans l’affaire Chandos Construction Ltd c Restructuration Deloitte Inc, la Cour suprême rend une décision concernant le test applicable à la règle anti-privation, qui a pour but d’empêcher de contourner les règles législatives et de common law d’insolvabilité par voie contractuelle.
The High Court recently considered whether a creditor can be a victim to, and obtain relief for, a transaction which is reversed before the claim is even brought and the creditor is put back to the position they were in before the transaction took place.
Timeline
Austria is gearing up to implement the EU Directive on Restructuring and Insolvency (known as the Restructuring Directive). We anticipate that the Restructuring Regulation (ReO) will enter into force on 17 July 2021.
The core element of the Restructuring Directive (and of the implementing law) is the promotion of a new restructuring procedure, to avoid the need for formal insolvency proceedings.
The restructuring proceedings
The ability to assume or reject executory contracts is one of the primary tools used by debtors in a Chapter 11 reorganization. Where a debtor has a contract with a third party that is “executory”—meaning that ongoing performance obligations remain for both the debtor and the contract counterparty on the date of the bankruptcy filing—the debtor can choose to either assume or reject the contract under 11 USC § 365.
At stake in a recent decision by the First Circuit was this: when a bankruptcy matter is before a federal district court based on non-core, “related to” jurisdiction, should the court apply the Federal Rules of Bankruptcy Procedure or the Federal Rules of Civil Procedure? The First Circuit ruled that the former apply, and in so doing joined three other circuits that have also considered this issue. Roy v. Canadian Pac. Ry. Co.
On May 3, 2021, Judge Marvin Isgur of the United States Bankruptcy Court for the Southern District of Texas held that indenture trustees must satisfy the “substantial contribution” standard to obtain administrative expense status for their fees and expenses incurred in a chapter 11 case. In his ruling, Judge Isgur expressly rejected the indenture trustee’s argument that it could obtain administrative expense status upon a showing that its fees and expenses were an actual, necessary cost of preserving the debtor’s estate.
Interim attachment is a provisional remedy under the Enforcement and Bankruptcy Law No. 2004 [ the “EBL” ] which individuals or legal entities can request for their monetary claims. Thanks to this institution, the debtor’s assets could be frozen to secure due yet unsecured debts, and as a result, the debtor would be forced to pay its debt.
3 [three] conditions must be in place to get an interim attachment – these are:
1- A monetary claim must be in question
- Victims of fraud often face an uphill battle in seeking restitution for their loss.
Executive Summary