We find ourselves in a year of transition, with (whisper it) the economy stabilising and an election tipped for the second half of 2024. Surely only a fool, in times such as these, would seek to anticipate what change could unfold in the legal landscape over the next 12 months. Challenge accepted! For 2024 we have dusted off our crystal ball and we set out below our (educated) guesses of what to expect for the year (or two) ahead…

Implementation of UNCITRAL model law on Enterprise Group Insolvency

Outcome of the UK government's market consultation and the likely shape and impact of the proposed regime

We wrote earlier this year about the rise in insolvencies in the UK at the end of the summer, as persistent inflation, the pain of increasing interest rates, higher energy bills and the end of pandemic measures all took their toll.

The well-publicised restructuring of the Galapagos group (the group) in 2019 spawned multiple challenges by stakeholders in the courts of a number of different jurisdictions. The latest decision of the English High Court considers the interpretation of the Distressed Disposal provision within an LMA-form intercreditor agreement (ICA) following a challenge by subordinated noteholders (the noteholders) to the validity of the release of their claims as part of the wider restructuring.

The government recently published its response to its earlier consultation on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague 2019 or the convention).

In the current difficult business environment, lenders will be weighing up their options in respect of defaulting borrowers – for some lenders that might include attempting to own the underlying business through a credit bid. Where debt is trading at a discount, a credit bid can also be a cost-efficient opportunity for an opportunistic buyer to acquire assets. So, what is a credit bid and what issues might such parties need to consider in using one?   

What is a credit bid?

The court has the power to challenge any decision of the officeholder in an insolvency process on application by a dissatisfied party. The ambit of that power depends upon the nature of the insolvency process but, broadly, the following categories of people will be entitled to apply:

The Insolvency Service released the quarterly insolvency statistics for July - September 2023 on 31 October, painting a picture of growing corporate distress. This period saw a total of 6,208 company insolvencies, which together with Q2 2023 marks the highest number of quarterly insolvencies since the midst of the financial crisis in 2009.

Although a comparison with Q2 figures shows a slight reduction of 2% in overall insolvencies, the figures for Q3 showed a marked rise in both compulsory liquidations (14% up on Q2) and administrations (11% higher than Q2).

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

As can often be the way, August was a disappointing month for many, with the dull and dreary weather casting a shadow over plans made for the school holidays. So too, it seems, was August a bad month for the business community – perhaps in some cases linked to the weather, with poorer performance by seasonal businesses reliant on fair weather custom.