The decision of the English High Court in Willmont and Finch v Shlosberg clarifies how insolvency practitioners can use and disclose documents obtained under compulsion or litigation to related insolvency estates.

The Court of Appeal has dismissed an appeal by Steel & Tube Holdings Limited (STH) against the legal basis and quantum of a $750,000 judgment based on a “de facto amalgamation” with its subsidiary company.

The ruling reinforces the message from the High Court that directors must be careful to maintain a subsidiary’s independence if they are to protect the parent against liability for the subsidiary’s debts.

The context

​Directors do not need to consider creditors’ interests when determining the fairness of their own remuneration, even after the company has become insolvent, the Court of Appeal has found.

The facts

The Companies Act 1993 requires that directors who vote to authorise director remuneration must sign a certificate stating that, in their opinion, the payment is fair to the company and setting out the grounds for that opinion.

Judgment of the Supreme Court, Chamber One, Number 134/2016, 04 March

DECISION OF THE GENERAL DIRECTORATE ON REGISTRIES AND NOTARIAL ACTIVITIES DATED OCTOBER 6, 2015: NO PUBLIC DEED REQUIREMENT FOR REGISTERING PROPERTY JUDICIALLY AWARDED IN AN INSOLVENCY PROCEEDING

Madrid Commercial Court No. 6 order of October 7, 2013: acquirer of a production unit subrogated in employment liabilities because the shareholders and directors had established the company specifically to acquire the insolvent company ("Marco Aldany Case")

The court did not rule out liability for employment obligations because the partners - directors of the insolvent company wished to acquire the production unit through a company created specifically to acquire it.

A credit institution that is the indirect owner of an insolvent company’s share capital is not a person closely related to the insolvent company, unless it uses an intermediary to avoid that status.

Approach

Whoever acquires control of a listed company due to a conversion of  debts  into  shares directly attributable to a court-sanctioned refinancing agreement will not have to launch a mandatory bid. This exemption applies automatically without the need for a CNMV evaluation.

INTRODUCTION

Swiss Civil Procedure Law in a Nutshell (Volume 9 of 12)

This blog series provides litigators and corporate counsel from other jurisdictions with a practical understanding of the mechanics, advantages, and limits of litigation before State Courts in Switzerland.

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