Pre-pack proceedings involve the negotiation for the sale of one or more productive units of a debtor company to a third party. This sale aims to satisfy the obligations of the creditors of said company by reaching an agreement on its value before the company formally files for insolvency proceedings.
Summary
In this High Court case ICC Judge Barber ordered a disqualified director to compensate creditors for losses under s15A of the Company Directors' Disqualification Act 1986 (CDDA) as a result of negligent conduct in trading a company illegally.
Facts
Anyone considering moving assets beyond reach of bona fide creditors should appreciate that the courts will adopt a wider approach that should discourage such conduct.
An important ruling1 shows that the courts take a broad approach to what may amount to a ‘transaction’ that places an asset out of reach of the victim. Avoiding a debt is tempting but highly risky, particularly where high value assets are at risk, such as real estate and commercial interests.
In Bank of Montreal v. Iskenderov, 2023 ONCA 528, the Ontario Court of Appeal held that actions to set aside a conveyance under section 2 of the Fraudulent Conveyances Act are subject to the basic two-year limitation period under the Limitations Act, 2002 – not the ten-year period prescribed by section 4 of the Real Property Limitations Act.
In the current economic climate, more and more companies are getting into financial difficulties, informal workouts by debtor companies, with support from certain creditors, seem to be increasingly common.
Under the Insolvency Act 1986 (IA 1986), office-holders are given wide powers but they are subject to the control of the court. In order to allow insolvency practitioners to carry out their duties efficiently and without having constantly to look over their shoulders, this control has always been exercised with a light touch. In recent years there have been several important cases examining these issues.[1]
ICC Judge Mullen’s decision in Sunset Ltd & Anor v Al-Hindi [2023] EWHC 2443 (Ch) emphasises the importance of ensuring the existence of a debt capable of forming the basis of a bankruptcy petition at the time of presentation.
The petition in this case was presented against Mr Al-Hindi by Sunset Limited and Morville Limited on 23 June 2022 based on his failure to comply with statutory demands dated 29 March 2022 claiming £248,750 said to be due by way of unpaid rent under leases of four London properties.
The Singapore High Court has again confirmed that a winding-up application concerning a disputed debt that is subject to an arbitration agreement will be dismissed if the arbitration agreement is prima facie valid and covers the dispute. This prima facie standard of review was first formulated three years ago by the Singapore Court of Appeal in AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2020] SCGA 33.
Early engagement, targeted information requests and use of the court's disclosure powers may assist consideration of whether to support or oppose a plan
Since their introduction in 2020, restructuring plans have become increasingly common in the retail and consumer sectors, including fitness centres (Virgin Active and Fitness First), casual dining (Prezzo) and, most recently, in greeting cards and gifting (Clintons).