This article was first published on the Practical Law website and in the PLC Magazine in June 2016.

Challenger banks, which are set up to compete with the larger traditional banks, have seen rapid growth in the wake of increased openness to change in the banking sector and a desire for more consumer choice. Their clever targeting of niche markets is opening up plenty of scope for growth. While this opportunity does not come without difficulties, the rewards for challenger banks that succeed can be considerable.

GENERAL CORPORATE

In this issue, we focus on cases concerning directors’ considerations when making a solvency statement for a capital reduction, and whether “bad leaver” provisions containing compulsory share transfers are capable of being contractual penalties.

Statements of solvency on a reduction of capital: what must the directors consider?

The High Court has held in BTI 2014 LLC v Sequana SA & others [2016] that payments of dividends were not made in breach of the Companies Act 2006 (the “Act”).

If your business is struggling to stay afloat and meet creditor demands, you may find that unlicensed insolvency advisers will claim to have all the answers to your questions.

However, only licensed insolvency practitioners are legally able to take insolvency appointments and manage corporate insolvency procedures from beginning to end.

In contrast, unlicensed insolvency advisers are only able to look at your circumstances and determine which third-party service providers might be best placed to deliver practical solutions to your problems.

LITIGATION, ARBITRATION, INVESTIGATIONS AND FINANCIAL CRIME

QUARTERLY UPDATE

Welcome to the latest issue of our Quarterly Update, in which we look at some of the recent highlights and developments in banking and finance disputes and financial crime.

IN THIS ISSUE WE LOOK AT:

A salutary lesson: if you do not intend to be bound by a letter of commitment, say so clearly

Bankruptcy made clearer: One of the bastions of old-style Scots terminology, guaranteed to perplex Southern audiences, is the law of bankruptcy in Scotland as it applies to individuals and assorted others.

But maybe for no longer. The Bankruptcy (Scotland) Act 2016 has reached the statute book. It’s a consolidating act, encompassing statutes from 1985, 1993, 2002, 2007, 2012 and 2014. It introduces a new and fairly modern framework, the aim being to make it less cumbersome and easier to use by those who do not have intimate knowledge of it (most of us!).

The UK Pension Protection Fund (PPF) is reviewing its insolvency risk model with Experian. The proposals being considered are particularly relevant to the financial services and charity sectors. They would be introduced from 2018/2019 (and will not be part of the draft levy rules and levy estimate for 2017/18, which we expect will contain few changes).

In summary, the PPF is considering:

HANJIN REHABILITATION STRATEGIC OPTIONS FOR OWNERS

The views and opinions expressed in this article are those of the author and do not necessarily reflect the of position of other members of 20 Essex Street Michael Collett QC 2016

Ports and retailers have been thrown into confusion with ships marooned and cargo trapped on board affected vessels as Hanjin Shipping Co Ltd ("Hanjin")'s creditors decided not to extend further financial support to the company.

Re Codere demonstrates the willingness of the court to sanction a scheme of arrangement where English law jurisdiction was purposefully sought. Unusually, the company was acquired by a foreign group and voluntarily assumed the group’s financial liabilities, solely for the purpose of invoking the jurisdiction of the English courts in relation to the scheme. In the light of this decision and the changing Brexit landscape this article considers the effect on the ability of foreign companies to forum-shop.

Our last Equity Issues relating to certain corporate questions arising in the case of BTI 2014 LLC v Sequana SA & others considered the circumstances in which the directors of a company are required to consider the interests of creditors and the extent to which the payment of a dividend by a company can be susceptible to challenge under section 423 of the Insolvency Act 1986 (IA 1986).

Hanjin Shipping's financial collapse has been well publicised. As a consequence of its collapse one can anticipate that there will be displaced containers worldwide with Hanjin vessels being arrested short of or at destination, being moored up or remaining outside port limits to avoid arrest or being stuck at a port short of destination with the port authority unwilling to provide port services absent payment in advance. One press report we have seen suggests that in excess of 500,000 TEUs already loaded on Hanjin vessels may be subject to delay.