Introduction
On 25 July 2008, HM Treasury published a Consultation Paper entitled Modernising the insolvency protections for the operation of financial markets - proposals to reform Part 7 of the 1989 Companies Act (the Consultation Paper).
Proposals
Introduction
In our March 2012 Insurance Update we considered the potential widening of the scope for creditors to claim damages against a director personally for contravention of the Corporations Act 2001 (Act). The Supreme Court of Queensland awarded Phoenix Constructions over $1.2 million in damages against Mr McCracken for contravention of s 182 of the Act. This decision, a first of its kind, was appealed by Mr McCracken.
The European Commission has published a paper on its study covering pre-insolvency, early intervention, reorganisation and liquidation.
HM Treasury has issued a press release stating that the Government welcomes the European Commission's approval of the restructuring of the Royal Bank of Scotland and State Aid approval for the Asset Protection Scheme.
View Government welcomes approval of RBS restructuring, 14 December 2009
Debtor-in-possession financing (“DIP financing”), which is new short-term financing obtained by an insolvent company after the commencement of an insolvency proceeding, is a recurring theme for two primary reasons. First, insolvent companies are generally desperate for an immediate infusion of cash to sustain operations. Second, creditors will usually provide such financing only on a super-priority basis, jumping ahead of existing secured creditors of the insolvent company.
Gleave and others v The Board of the Pension Protection Fund [2008] EWHC 1099 (Ch)
The High Court ruled that calculations of employer debt by scheme actuaries cannot be challenged by insolvency practitioners unless there is evidence of fraud or error.
This blog refers to Bettina Goletz’s blog on “Limits on non-compete and non-solicitation clauses under German law”. We have recently been asked whether the employee is entitled to compensation payments under a post-contractual non-compete clause in the situation where the employing company files for insolvency.
At the end of 2011, the Federal Government introduced two draft Bills directed at clamping down on companies that engage in “phoenix” activity.
On 25 March 2010, HM Treasury published a consultation paper which proposes improvements to the protection and payment of benefits for policyholders of insurers in financial difficulty. In particular, the proposals address certain gaps in the regime for insurers in administration in contrast to the regime applied in liquidation.