In the Q3 2014 edition of Global Insight, we discussed the merits of bankruptcy sales for distressed hospitals in the United States. In many ways, the challenges facing healthcare companies in America have been mirrored in the UK care home sector in recent years. Unlike the US, the majority of health service provision in the UK is via the publicly funded National Health Service. An exception exists however in the provision of residential care to the elderly which has seen large scale private sector involvement.
CONSIDERABLE RISKS FOR PRIVATE INVESTORS
Mr Justice Hildyard has handed down his first instance decision on the second set of schemes of arrangement proposed by the Apcoa group.
Following on from our article on “Understanding and managing the risks of an insolvent acquisition” in the Q2 2014 edition of Global Insight, in this third article in our series of risks and opportunities in the fashion retail sector we assess one of the most prominent areas of risk for suppliers - the insolvency of a trade customer/retailer.
Introduction to CVAs
A company voluntary arrangement (“CVA”) is a tool available to a company in financial difficulty to restructure its debts. In contrast to other insolvency procedures, the directors remain in control of the business which continues to operate broadly as normal, subject to the supervision of an insolvency practitioner (“the Supervisor”).
Singularis Holdings Limited v PricewaterhouseCoopers [2014] UKPC 36
PricewaterhouseCoopers v Saad Investments Company Limited [2014] UKPC 35
The Privy Council gives credence to the concept of “modified universalism” (being the court’s common law power to assist foreign winding up proceedings) and notes some of the circumstances which would permit a “stranger” to a winding up order the opportunity to challenge that order.
The facts:
Key Points
- Paragraph 13 of Schedule 4 to the Insolvency Act 1986 ("Paragraph 13") permits a liquidator to do all acts "necessary" for the winding up and distribution of property.
- The decision as to what action is "necessary" is one for the liquidators (albeit subject to sanction).
- Nothing in FSMA 2000 prevented the investors from assigning their claims against the former operators..
The facts
Key Point
The Court has given guidance on when a company in administration has possession of third party assets allowing an administrator to apply for an order allowing him to sell them.
The Facts
The administrators of a company applied to Court under paragraphs 72 and 68 of Schedule B1 to the Insolvency Act 1986 for permission to sell assets located on its freehold premises pursuant to a chattel hire contract with a group company (the "Assets").
The Decision
The recent case of Husky Group Ltd (“Husky”) underlines the importance of following your lawyer’s advice and not pursuing the defense of the indefensible.
Key Points
- Phones 4U went into administration in September 2014.
- Technology companies in the US have also faced a difficult market.
- Phones 4U’s complicated financing structure contributed to its downfall, as did its reliance on one or two key suppliers.
- The Protection of Essential Supplies Order will have considerable ramifications for tech suppliers when it comes into force.
PHONES 4U COLLAPSE: PART 1
The Commission has published its rating system and an advice note to operators on the requirements to segregate customer funds and disclose to customers the level of protection offered in the event of insolvency.
This ratings category must be included in operator’s terms and conditions by 31 December 2014.