The European Commission has published a paper on its study covering pre-insolvency, early intervention, reorganisation and liquidation.

Chapter 11 focuses on preserving reorganization or going concern value over liquidation value. As a corollary, Chapter 11 assumes that the most efficacious way to achieve that result is to retain management and enable multiple outcomes either through a plan of reorganization, a series of going concern sales and even a liquidating plan. Chapter 11 enables a wide range of proposals to be put into a reorganization plan, including having the company and its management survive the process.

In a series of cases in 2009 culminating in the decision of the Honourable Mr. Justice Morawetz in Re Indalex Limited (“Indalex”), the CCAA Courts have considered the appropriateness of approving the granting of a guarantee in connection with a cross-border DIP facility. This issue has been at the forefront – with varying results – in a number of recent CCAA cases in which DIP financing was dependent on the CCAA debtor providing a secured guarantee of the obligations of the parent or affiliate company’s DIP financing in its own Chapter 11 case.

In Re EarthFirst Canada Inc., Justice Romaine had to consider establishing a “hardship fund” that would be used to allow EarthFirst Canada Inc. (“EarthFirst”) to pay pre-filing obligations owing to certain suppliers and contractors operating in a remote community where EarthFirst is developing a wind farm project.

Section 147 of the Bankruptcy and Insolvency Act (“BIA”) provides that the Superintendent’s Levy is applied to defray the supervisory expenses of the Superintendent, will be charged on dividend payments made by the trustee.

There is currently no administration process in Jersey. However, an interesting area of development is the gradual trend towards seeking English administration for Jersey incorporated companies with assets or businesses in England. This offers a possible alternative for a company to winding up on just and equitable grounds where it is desirable to keep the company as a going concern and certain pre-requisites, as a matter of English law, are met (primarily that administration offers a chance of a better realisation for creditors than winding up).

In a judgment issued in test cases, OTG Ltd v Barke and others, the EAT held that administration proceedings are not capable of coming within the insolvency exception to the normal business transfers rule.

Important news for those buying a business out of “pre-pack” administration. The Employment Appeal Tribunal (EAT) in Pressure Coolers v.

The EAT has confirmed that it is not necessary for the eventual transferee to have been identified in order for an employee, dismissed in the run up to a transfer, to claim automatic unfair dismissal by reason of a relevant transfer under TUPE (Spaceright Europe Ltd v Baillavoine & another).

The Employment Appeal Tribunal has ruled in five conjoined appeals that TUPE applies in all administrations, since they constitute ”relevant insolvency proceedings” and not ”liquidation proceedings”. This will be the case even in “pre-pack” administrations, where a business is placed into administration but immediately sold to a purchaser who has been lined up to buy the business beforehand.