Directors resign for many reasons. For example, there may be disagreements among stakeholders about the future course of the company, they may be concerned about the risks associated with financial difficulty/insolvency, or they may just wish to retire.
With the lifting of the restrictions on the presentation of winding up petitions, and the likely cash flow pressures caused by price inflation, it is widely anticipated that we will see an increase in the number of companies subject to winding up proceedings. For any business dealing with a company in financial distress, a recent decision of the High Court of England and Wales serves as an important reminder that transactions which take place before the company has been wound up can be vulnerable to challenge.
On 20 May 2022 Mr Justice Adam Johnson handed down his judgment in the matter of Swiss Cottage Properties Limited (in liquidation) [2022] EWHC 1495 (Ch). Deloitte, represented by Derrick Dale QC and Ben Griffiths as instructed by DAC Beachcroft LLP, successfully defended a claim for negligence. A copy of the judgment is available here.
This article was originally published by Travel Weekly on 21 July
The UK Government has indicated that its enthusiasm for introducing consumer protection for airline failure has waned significantly. It now looks doubtful that the recommendations of the Airline Insolvency Review will be implemented in the short term, or even at all.
New data from UHY Hacker Young has found that UK restaurant insolvencies have increased by 64% in the last year... and it isn't just Covid that's to blame (though undoubtedly it is a factor). As eloquently put by a partner at UHY: "The restaurant sector has emerged from one crisis only to face an onslaught of other challenges."
Cryptoassets & Insolvency: Legal, Regulatory and Practical Considerations Shearman & Sterling 21 July 2022 Part I: Introduction and Background Introduction Cryptoassets have emerged from relative obscurity to become an increasingly significant and mainstream presence: in just five years the global market cap for cryptocurrencies rose from around $15bn to over $3tn at its peak in November of last year. This has fueled a prolific expansion of cryptofocussed businesses (e.g.
Judgment has been reserved on the sanction of Houst Ltd’s restructuring plan at a hearing held in front of Zacaroli J on Friday morning (15 July 2022), while the company gathers the further valuation information requested by the court. If sanctioned, the plan will be the first use of the restructuring plan by an SME, and will involve a “cram” of HMRC notwithstanding the tax authority’s secondary preferential creditor status.
The proposed plan
Today’s insolvency statistics contained few surprises, creditors’ voluntary liquidations (CVLs) have continued to outnumber other types of company insolvencies by some margin and have distorted the overall picture, which is that (putting aside CVLs where directors/shareholders elect to pull the plug themselves on a company’s survival) figures for other types of company insolvencies remain below pre-pandemic figures.
The fallout from failed tax saving arrangements using Employee Benefit Trusts (“EBTs”) continues. In Hunt, directors who in reliance on tax advice from a firm of accountants, arranged for a company to use an EBT, were found not in breach of duty. The decision whilst of comfort to directors, increases the likelihood of recovery actions following failed tax saving schemes shifting back on the accountancy firm tax advisors.
Background
There has been much commentary recently on the treatment by lenders of individuals and small and medium sized enterprises (SMEs). Indeed, the FCA has made its expectations very clear – that lenders should fully support those experiencing financial difficulty.
As a restructuring professional and insolvency practitioner, and a former regulator, I have some competing views and thoughts on what this means and whether it is the optimum approach in the longer term.