S216(3) of the Insolvency Act 1986 restricts former directors of insolvent companies from being involved with companies or businesses using a prohibited name for five years following an insolvent liquidation.
S216(3) provides that, unless leave is granted by the court or one of the statutory exceptions applies, a person who was a director of a company at any time in the 12 months before it entered insolvent liquidation must not, for five years from the date of liquidation, be a director of a company that is known by a “prohibited name”, be concerned in or take part in the formation, promotion or management of a company or carry on a business under the “prohibited name”. A prohibited name is the name that the liquidated company was known as within 12 months prior to its liquidation, or a name so similar that it suggests an association with the liquidated company. The restriction does not apply where the court grants leave under section 216(3), or if one of the exceptions contained in Rule 22.4, 22.6 or 22.7 of the Insolvency Rules 2016 applies. Breach of section 216 can result in criminal sanctions, and may also expose the individual to personal liability for the debts incurred by the company while acting in contravention of the section.
One of the statutory exceptions is contained in Rule 22.7. This permits the use of a prohibited name where the company using the name (or a name suggesting an association with the liquidated company) had been known by that name throughout the 12 months ending on the day before the liquidated company entered into liquidation, and had not been dormant during that 12-month period.
On remand from the Fifth Circuit, the Bankruptcy Court for the Southern District of Texas (the “Court”) held in the Serta Simmons Bedding (“Serta”) liability management exercise (“LME”)[1] dispute that a credit agreement’s pro-rata sharing provision applied to noncash payments, in this case, a debt-for-debt exchange, and not solely to cash payments. The Serta Court held that a majority of first lien term holders who participated in the uptier liability management transaction (the “Participating Lenders”) breached this provision by receiving greater than their pro rata share of the exchange loans and failing to purchase participations from certain minority first lien holders who were excluded from the uptier transaction (the “Excluded Lenders”). Ultimately, the Court entered a judgment in favor of the Excluded Lenders for $161.5 million. Sponsors and lenders participating in an LME should carefully review Serta to avoid making the same costly errors.
On June 18, 2026, the English High Court sanctioned two interconnected restructuring plans that will eliminate approximately US$9.6 billion of debt and implement a broader operational reorganization of the group. Just eight days later, on June 26, 2026, Judge Glenn of the US Bankruptcy Court for the Southern District of New York granted Chapter 15 recognition to the UK proceedings, clearing the path for enforcement of the restructuring in the US.
This Insight gives an overview of the NFE restructuring, why New Fortress Energy chose the UK over Chapter 11 and what the future might hold for US quartered businesses looking to restructure. With views from colleagues in the US and UK considering the usefulness of the Part26A restructuring plan process for US corporates.
With the anticipated appeal in Novalpina having been heard at the end of last month, practitioners will be watching closely to see what the courts have in store for solvent liquidations. In particular, there remains considerable interest in whether the first instance findings concerning the requirement to pay all debts, together with statutory interest, within 12 months of the commencement of the MVL will be upheld. Equally important is how the court may address the practical challenges posed by disputed or contingent liabilities.
While the profession awaits the outcome, HMRC has published updated guidance outlining its expectations for the treatment of a company’s tax affairs both before and during the MVL process. The guidance provides a clear timetable indicating what insolvency practitioners can expect from HMRC and what HMRC expects in return. Much of the content will be familiar, reflecting principles set out in previous publications, but it is helpful to have the information consolidated in a single source.
When placing a company into Members’ Voluntary Liquidation (“MVL“), the statutory declaration of solvency is not simply a box‑ticking exercise. The recent High Court judgment in Greenbank Technology Ltd (in liquidation) serves as a stark reminder that a statutory declaration is a substantive legal act, not just a formality that can be cured later.
Greenback Technology Ltd (the “Company“) carried on the business of manufacturing can-making machinery and thermal process engineering equipment. It, together with its parent, formed part of the wider group owned by ASP CPM Holdings, LLC (“Group“). In 2024, the Group underwent a rationalisation process in order to simplify the Group’s corporate footprint and thus minimise the Group’s reporting obligations. The Company was to transfer all of its assets to its parent company in a hive up, undergo a capital reduction, and then enter into MVL to be wound-down solvently.
As required by s89 Insolvency Act 1986, where it is proposed to wind up a company via a solvent liquidation, the directors (or a majority of such) must make a statutory declaration of the company’s solvency, confirming they have made a full inquiry into the company’s affairs and have formed the opinion that the company will be able to pay its debts in full, together with interest at the official rate within 12 months from the date of the commencement of the winding up.
The main point of contention in Greenbank was a seemingly simple, but fatal error: one director did not swear the statutory declaration before a person authorised in accordance with the requirements set out in the Statutory Declarations Act 1835 (such as a solicitor, commissioner for oaths, notary public or justice of the peace). The declaration otherwise contained the correct information and reflected the Company’s genuine solvency.
“the Rules cannot remain unchanged as the world moves on. Communication, technology, culture, and the day-to-day realities of personal and corporate finance continues to change at pace. It is crucial that the Rules are reviewed and amended where necessary.”
In Cross Transport Ltd (In Administration) [2026] EWHC 1636 (Ch) the Court was asked to consider the “super priority” status afford to protected moratorium debts in the context of a subsequent administration.
The Insolvency Act 1986 requires a company, entering a moratorium, to pay certain debts that are incurred during the moratorium period (“moratorium debts”), There are also certain pre-moratorium debts (“pre-moratorium debts”) which the company does not have to pay during the moratorium period, but which remain due – the company benefits from a payment holiday. However, should the company enter administration within 12 weeks of a moratorium coming to an end, any unpaid moratorium debts or unpaid pre-moratorium debts (“Protected Moratorium Debts”) will be payable under para 64A of Part A1 of the Insolvency Act in priority to other administration expenses.
The question addressed in this case, was whether, when and if the costs and expenses of the administration could be paid ahead of Protected Moratorium Debts.
The judgment will be of particular interest to administrators, litigation funders and creditors where a company enters administration within the 12-week period following the end of a moratorium and there are unpaid Protected Moratorium Debts.
In NOAL SCSp v Novalpina Capital LLP [2025], the court took a strict view of the statutory requirement that companies entering a member’s voluntary liquidation (MVL) must be able to pay all their debts (including contingent or disputed ones) within 12 months.
That mattered because, in practice, some insolvency professionals understood the legislation to mean that if the company was balance sheet solvent and able to pay its debts, they did not need to be actually paid before the end of 12 month.
This report was therefore commissioned by the Insolvency Service in response to Novlapina to
Better understand the potential impact of the ruling on MVL practice; and
To explore and understand the MVL landscape more generally, with particular focus on the efficiency and effectiveness of MVLs
Judge Craig Goldblatt’s recent decision in the Delaware bankruptcy court carves out a safe haven for creditors amid the Third Circuit’s expanding view of what claims belong to a debtor’s estate. Relying on the Third Circuit’s decision in Whittaker, Clark & Daniels[1], Judge Goldblatt held that certain claims against directors and officers, which are traditionally treated as estate property, instead belong to individual creditors.
The dispute arises from the chapter 11 cases of Joann, an iconic national fabric and hobby retailer. In the nine months between its first and second filings, vendors commenced a state court proceeding asserting that Joann’s directors and officers were guilty of common law fraud and negligent misrepresentation by making false and misleading statements about its financial condition that induced the vendors to extend credit. The case was removed to federal court and transferred to the Delaware bankruptcy court (Judge Goldblatt) with jurisdiction over Joann’s chapter 11 cases.
Joann’s second chapter 11 case involved a sale of substantially all of its assets; after which, Joann filed an adversary proceeding seeking to dismiss the vendors’ action. Joann argued that the claims against its directors and officers were derivative of the company and therefore belonged to the estate. As such, Joann asserted that the claims were transferred to the buyer of its assets.
In distinguishing between derivative and direct claims, courts historically apply a straightforward framework. Under this approach, if applicable non-bankruptcy law would allow the debtor corporation to assert the claim prior to bankruptcy and the alleged injury is to the corporation generally with no particularized injury against any creditor, then courts generally consider the claim derivative and a part of the bankruptcy estate. Since alleged misconduct by officers and directors typically harms creditors only indirectly through injury to the corporation, courts generally view such claims as derivative and, thus, estate property.
As noted by Judge Goldblatt, the Third Circuit found this traditional framework unworkable for some state law claims, such as successor liability, where creditors have a nominal right to sue for secondary harms derived from prepetition injuries to the debtor corporation. To resolve this tension, the Third Circuit, over a series of decisions, shifted the inquiry from whether the debtor could bring the claim prior to bankruptcy to the nature of the claim itself. Judge Goldblatt found the synthesis of the Third Circuit’s evolving case law in Whittaker, which held that claims are direct when the theory of liability is based on a particularized injury directly traceable to the conduct of the defendant, and claims are derivative if the theory of liability is based on an injury to the debtor that resulted in secondary harm to all creditors.
In applying the test to Joann, Judge Goldblatt found that the vendors’ injuries were particularized and traceable to the conduct of the directors and officers, despite the vendors’ claims relying on the same misrepresentations by those directors and officers. In making this finding, Judge Goldblatt focused on the elements of the state law claim asserted and not the facts underlying the claim. He held that since in Ohio (the law applicable to the claims) creditors need to prove justifiable reliance of the misrepresentations of directors and officers, the theory of liability must be particularized to each creditor. Of critical importance to the opinion is the fact that if any creditor failed to establish reliance, then the directors and officers would not be liable to that creditor.
The Joann decision highlights a subtle but important shift in the Third Circuit’s jurisprudence regarding claims against directors and officers. Debtors may no longer be able to rely on the traditional framework to assume that claims against directors and officers will belong to the estate. A loss of these claims could severely impact the value of a struggling estate that relies on potential recoveries to fund a chapter 11 plan or maximize recoveries for creditors generally. Therefore, practitioners in the Third Circuit and elsewhere should carefully review potential claims against directors and officers prior to filing to ensure that they fully understand whether potential claims are estate assets, the potential value of such claims and the potential impact on the feasibility of confirming a plan.
The court did not have turn to r12.64 in this case, finding that the “appointment” of administrators was invalid (therefore there was nothing to remedy because the appointment was of no effect), but went on to consider whether r12.64 could have provided a remedy if the appointment was not void. Concluding that the defect was such that it would have caused substantial injustice and could not and should not be remedied by court order.
