When a company is in financial distress, directors face difficult choices. Should they trade on to try to “trade out” of the company’s financial difficulties or should they file for insolvency? If they act too soon, will creditors complain that they should have done more to save the business? A recent English High Court case raises the prospect of directors potentially being held to account for decisions that “merely postpone the inevitable.”
In a rare case, the High Court has dismissed an application by liquidators pursuant to sections 235 and 236 of the Insolvency Act 1986, which give office-holders broad powers to obtain information and documents concerning the company and its affairs: Webb v Eversholt Rail Limited [2024] EWHC 2217 (Ch).
The English High Court has, for the first time, ordered that security for costs be provided by the plan company in favour of a creditor.
Background
Consort was a contractor under a Private Finance Initiative (PFI) for the development of new hospital facilities for an NHS Trust. It proposed a restructuring plan, primarily directed at compromising its liabilities under the PFI project agreement.
The below sets out key considerations when dealing with an extension of an administration at the end of the first-year anniversary.
Shareholder disputes can often be complex and emotionally charged, particularly in small or family-owned companies where personal relationships and business interests are deeply intertwined. When such disputes reach an impasse, the law provides several mechanisms for resolution. In particular, disgruntled shareholders have the ability to bring statutory based claims against the company.
The High Court has ordered two former directors of British Home Stores ("BHS") to pay equitable compensation of £110 million in respect of misfeasance claims brought by the former retailer's joint liquidators: Wright v Chappell [2024] EWHC 2166 (Ch).
The High Court in England recently issued a stark warning to directors who fail to consider their duties to the company and its creditors when entering financial difficulties.
Background
Categorisation of a charge as fixed or floating will have a significant impact on how assets are dealt with on insolvency and creditor outcomes.
Typical fixed charge assets include land, property, shares, plant and machinery, intellectual property such as copyrights, patents and trademarks and goodwill.
Typical floating charge assets include stock and inventory, trade debtors, cash and currency, movable plant and machinery (such as vehicles), and raw materials and other consumable items used by the business.
The Technology and Construction Court recently delivered helpful judicial guidance on when an insured’s cause of action under an the NHBC ‘Buildmark Choice’ policy, providing cover for contractor insolvency before practical completion arises.