The Package Travel Regulations (“PTRs”), which came into force in 2018, have been tested significantly in recent years with failures such as Thomas Cook and Monarch, in addition to the COVID-19 pandemic.
Early engagement, targeted information requests and use of the court's disclosure powers may assist consideration of whether to support or oppose a plan
Since their introduction in 2020, restructuring plans have become increasingly common in the retail and consumer sectors, including fitness centres (Virgin Active and Fitness First), casual dining (Prezzo) and, most recently, in greeting cards and gifting (Clintons).
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.
Anyone considering moving assets beyond reach of bona fide creditors should appreciate that the courts will adopt a wider approach that should discourage such conduct.
An important ruling1 shows that the courts take a broad approach to what may amount to a ‘transaction’ that places an asset out of reach of the victim. Avoiding a debt is tempting but highly risky, particularly where high value assets are at risk, such as real estate and commercial interests.
In the current economic climate, more and more companies are getting into financial difficulties, informal workouts by debtor companies, with support from certain creditors, seem to be increasingly common.
Under the Insolvency Act 1986 (IA 1986), office-holders are given wide powers but they are subject to the control of the court. In order to allow insolvency practitioners to carry out their duties efficiently and without having constantly to look over their shoulders, this control has always been exercised with a light touch. In recent years there have been several important cases examining these issues.[1]
ICC Judge Mullen’s decision in Sunset Ltd & Anor v Al-Hindi [2023] EWHC 2443 (Ch) emphasises the importance of ensuring the existence of a debt capable of forming the basis of a bankruptcy petition at the time of presentation.
The petition in this case was presented against Mr Al-Hindi by Sunset Limited and Morville Limited on 23 June 2022 based on his failure to comply with statutory demands dated 29 March 2022 claiming £248,750 said to be due by way of unpaid rent under leases of four London properties.
The recent rise in company insolvencies has been driven by a high number of creditors’ voluntary liquidations (CVL). The outlook for the rest of 2023 is that there will be an even higher number of companies entering a formal insolvency process in almost every sector and industry.
A high proportion of these insolvencies are small businesses (SME’s), some of which had managed to keep going with the help of Government-led support packages and bounce back loans, but with rising interest rates and inflation, they are now struggling to repay loans and obtain financing.
Executive Summary
In a radical departure from settled case law, the English High Court has eroded the protections of English law creditors guaranteed by the Rule in Gibbs1 .
This week’s Dekagram examines what happens when rules change: that transitional period between one set of rules and another, when no one is quite sure what’s happening. We seem to have had quite a few of those recently; just as we were getting over the horrors of the Withdrawal Act, along came the changes to the Fixed Recoverable Costs regime – changes which, we remind readers, remain in a state of flux, notwithstanding that the new regime is now in force.
Res Judicata and Rule Changes