The European High Yield Association's proposals for reforming the UK insolvency laws risk pushing the UK towards the US litigation-heavy model says Reynolds Porter Chamberlain LLP, the City law firm.

In proposals submitted to HM Treasury, the trade body for the high yield debt industry called for a "court supervised restructuring process" where:

The retail sector and its suppliers operate at the sharp end of the economy and feel the impact of tighter consumer spending with more immediacy than most other sectors.

The European High Yield Association (EHYA), which represents banks and investors involved in high risk bond and loan markets, has written to the UK Treasury suggesting three key areas to reform insolvency legislation to improve the 'efficiency and fairness' of corporate restructurings.

The letter suggests changes to help prevent value destruction caused by suppliers and customers terminating contractual relations, speed up resolution of disputes and restrict the influence of creditors and shareholders with no economic interest in the revalued business.

On July 19, 2024, Judge Michael Wiles of the US Bankruptcy Court for the Southern District of New York issued a ruling in In re Mercon Coffee Corporation, Case No. 23-11945, invalidating insider releases in a proposed chapter 11 plan on the basis that the releases were improper retention-related transfers.

Judge Wiles found that he could not approve the releases – even though the debtors had promised them and insiders had relied upon that promise – because the releases did not meet the strict requirements of Bankruptcy Code Section 503(c).

In an opinion by Judge Roth issued on March 30, 2017, the Court of Appeals for the Third Circuit held that two suppliers who had sold electrical materials to a bankrupt contractor had violated the automatic stay by asserting a construction lien against the owner of the development where the contractor had installed the materials supplied.

A client who is building a large mixed use development called me yesterday with a dilemma. He had received a letter from a local equipment supplier, who was on the verge of bankruptcy because the sub-contractor who had engaged him had gone into administration after the hire period had come to an end. He was pleading with my client to help him recover some £20,000 of hire fees still owed to him.

As highlighted by the 2008-2009 crisis, the insolvency of sub-suppliers raises important challenges. Automotive parts suppliers may need to find an alternative sub-supplier at short notice or may have to take over the production of certain parts themselves, which often requires a recovery of the tools that were provided to the sub-supplier. Both scenarios raise difficult legal issues.

Construction giant Carillion is headed into liquidation, putting billions of pounds worth of contracts into potential chaos.

The fallout from the failure of the UK’s second largest construction firm will affect many and generate many column inches asking the fundamental question: how could it happen? The truth is, the construction sector remains extremely difficult, and a large failure of this type had been expected by industry watchers for some time.

What a week for the food and restaurant industry!

While American manufacturing has experienced a resurgence in recent years, some manufacturers continue to face challenges.