The motivation for the recent insolvency law reforms is to give insolvent companies breathing space to try to reorganise their affairs and allow viable businesses to continue to trade
With the threat of increased insolvencies as an effect of the COVID-19 pandemic remaining very real, the construction sector needs to be aware of the impact of changes to insolvency laws.
Changes to insolvency laws in the UK, Australia and Singapore may affect how parties deal with the termination of construction contracts where one party to the agreement is insolvent.
Last year the Corporate Insolvency and Governance Act (the Act) made both temporary and permanent changes to the UK insolvency laws.
As part of these measures, a provision was inserted into existing legislation which curtails the ability of suppliers to terminate supply contracts when a customer becomes insolvent (the so called `ipso facto regime').
One of the main differences in insolvency law between Scotland and England & Wales relates to the challengeable transactions regime under the Insolvency Act 1986.
In both jurisdictions, transactions that are entered into before a formal insolvency process begins can be attacked if they are detrimental to the creditors of the insolvent company. However, although both systems use similar language and address similar concerns, the law in the two jurisdictions is different, most notably with different time periods and defences to a challenge.
Some further important guidance by Zacaroli J in the recent judgment on Hurricane Energy. In that case, the company (with the support of the company's ad hoc committee of bond holders who were going to take 95% of the equity under the plan in return for certain adjustments to the bonds) sought to cram down the class of dissenting shareholders through a restructuring plan ("plan").
This note summarises the duties that directors of companies incorporated in England and Wales are subject to
This note summarises the duties that directors of companies incorporated in England and Wales are subject to.
This note explains those duties, and matters that directors should consider in relation to them, in the context of the COVID-19 pandemic.
Directors' Duties and Related Matters, in the Context of COVID-19
EMEA UK 2 July 2021
Scope and Purpose of This Note
This note summarises the duties that directors of companies incorporated in England and Wales are subject to.
This note explains those duties, and matters that directors should consider in relation to them, in the context of the COVID-19 pandemic.
Mr Justice Zacaroli has handed down his judgment in Hurricane Energy plc [2021] EWHC 1759 (Ch).
Summary
The Court declined to approve the cross-class cram down of Hurricane’s shareholders as part of the Part 26A restructuring plan because the available evidence did not demonstrate that the shareholders were “no worse off” as a result of the restructuring plan. On that basis the restructuring plan failed.
The past week has been frustrating for landlords, with the High Court rejecting a landlord challenge to New Look’s CVA (Lazari Properties 2 Ltd and others v New Look Retailers Ltd and others [2021] EWHC 1209 (Ch)) and days later sanctioning Virgin Active’s restructuring plan (Re Virgin Active Holdings Ltd and others [2021] EWHC 1246 (Ch)).
The UK Government has published a Consultation1 which sets out its proposals for targeted (but significant) amendments to certain aspects of the existing UK insolvency arrangements for insurers.
On 28 June 2021, the UK High Court declined to sanction Hurricane Energy Plc’s restructuring plan. This was the first time a restructuring plan seeking to achieve a debt-for-equity swap against the wishes of existing shareholders had come before the court.
Background