What’s That? WhatsApp creates legally binding contract (UK)

By Rachael Markham on May 16, 2025 Posted in UK

As insolvency practitioners (IPs) it is not unusual to have to consider the terms of a particular contract, whether that is enforcing the terms of that for the insolvent entity or considering the rights of the third party as against the company, and in some cases, it is necessary for IPs to enter into a contract themsleves.

This blog from our colleagues in IP & Technology highlights how easy it can be to (inadvertently) create a legally binding contract – in this case by WhatsApp – standing as a reminder to IPs that exchanges of messages could be relevant when considering a third party contract, but also that care should be taken when exchanging messages so as not to create a binding contract when not intended.

Practice Statement: Restructuring Plans and Schemes – What Does this Mean for the Future? (UK)

By Rachael Markham and Charlotte Møller on May 14, 2025 Posted in UK

We have seen an increasing number of contested restructuring plans (RPs) over the last quarter. With a notable shift of RPs into the litigation arena, and some gentle push back from the judiciary about timetabling and use of court time the judiciary has published a draft practice statement for consultation outlining new case management requirements for those proposing a plan.

Application of the Insolvency Claw-Back Barrier under Article 16 of the EU Insolvency Regulation to Cross-Border Shareholder Loans

By Jens Rinze on May 14, 2025 Posted in Cross Border, EU

Article 7(m) of the EU Insolvency Regulation (2015/848) provides that the law of the EU Member State in which insolvency proceedings have been commenced in respect of a company determines whether certain acts carried out prior to the commencement of insolvency proceedings, (such as payments made by the company), are void, voidable or unenforceable and may therefore be clawed back by the insolvency administrator.

However, Article 16 of the same Regulation provides an exception to this. This applies where the relevant relationship under which the payment was made is subject to the law of another EU Member State and under the law of that other Member State the payment cannot be challenged – the claw back barrier provisions.

What are the Key Takeaways for managing HMRC in a UK restructuring plan (RPs) and beyond?

By Rachael Markham, Charlotte Møller and John Alderton on April 15, 2025 Posted in UK

Much will depend on the specifics of a company’s financial position, but there are some themes from the OutsideClinic and Enzen judgments that are helpful – and arguably so even beyond the context of RPs for a company’s managing its relationship with HMRC.

Is HMRC in or out of the money?

In OutsideClinic HMRC had reservations about the valuation evidence put forward by the plan company in support of its position that administration was the relevant alternative. Under the RP HMRC stood to recover 5p in the £ but nil in the relevant alternative – HMRC was therefore out of the money.

The valuation evidence was based on certain assumptions in respect of the recoverability of book debts which if those turned out to be inaccurate would have entitled HMRC to a distribution in the alternative – meaning it would have been in the money. It was acknowledged by the plan company that it would only take a “relatively small shift” in the assumptions for this to be the case.

Recognising the likelihood of HMRC being an in the money creditor on a contested application the parties negotiated an improved outcome for HMRC – funded by the plan investors – which would not impact the returns to other creditors.

El-Husseiny v Invest Bank – expanding office holder claims? (UK)

By Chris Paschali on April 2, 2025 Posted in UK

S423 of the Insolvency Act 1986 (IA 1986) provides a route for office holders to challenge transactions where a person deliberately transfers assets at an undervalue to put them beyond the reach of creditors. The Supreme Court in El-Husseiny and another (Appellants) v Invest Bank PSC (Respondent) [2025] UKSC 4 recently confirmed what is meant by “transaction” in the context of s423 – and that the same meaning should be given to “transactions” caught by s238 and s339 of the IA 1986.

Claims under s423 can be more difficult to establish than claims under s238 of the IA 1986 because although both claims require there to have been a transaction at an undervalue (or for no consideration) s423 also requires an office holder to prove that there was an intention to put assets beyond the reach of creditors. An office holder is therefore more likely to bring a claim under s238 than s423, and for that reason, this judgment is helpful because it broadens the types of transactions that might fall within the definition of “transaction”.

And just like that another Restructuring Plan is sanctioned with HMRC supporting (UK)

By Rachael Markham and Annabelle McKeeve on April 1, 2025 Posted in UK

Save your Sterling concept high quality and high resolution studio shoot

The Outside Clinic restructuring plan (RP) was sanctioned last week with HMRC voting in favour of it. In a similar vein to Enzen (see our earlier blog) HMRC initially indicated that it was not inclined to support the plan, but, after negotiating a higher return following the convening hearing, it voted in favour of it. A somewhat different outcome in circumstance where HMRC had (prior to the company proposing a plan) instructed its solicitors to present a winding up petition after attempts to agree a time to pay agreement had failed.

HMRC Supports a UK Restructuring Plan with its Change in Approach – Good News for Future RPs?

By Annabelle McKeeve and Rachael Markham on March 27, 2025 Posted in UK

You may have read our previous blog about the Outside Clinic Restructuring Plan (RP) which asked whether 5p was enough to cram down HMRC and thought, well surely if that’s not enough, 10p would work? The Enzen Restructuring Plans (RPs) that were sanctioned this week also sought to compromise HMRC’s secondary preferential debt proposing a payment that would see HMRC recover 10p in the £ compared to nil in the relevant alternative. The Enzen RPs were not only sanctioned but also supported by HMRC – does this signal a change in attitude by HMRC?

(UK) The issue with hybrid insolvency claims rumbles on

By Jon Chesman on March 24, 2025 Posted in UK

Should a claim be struck out where the applicant has failed to comply with the procedural requirements relating to “hybrid” claims? In the recent case of Park Regis Birmingham LLP [2025] EWHC 139 (ch), the High Court held that it would be disproportionate to strike out the claim on that basis.

U.S. Trustee Objects to Stalking Horse Bid Protections in Three Recent Delaware Bankruptcy Cases

By Kyle Arendsen on March 14, 2025 Posted in US

Recently, the Office of the United States Trustee (the “UST”) has been objecting to debtors’ motions to establish bidding procedures to sell some or all of an estate’s assets pursuant to section 363 of the Bankruptcy Code. As highlighted in three recent Delaware cases, the UST has objected to stalking horse bid protections on a number of grounds, including: (a) when such protections would be payable; (b) the proposed priority classification for such protections; (c) the scope of the bid protections; and (d) whether the debtor has demonstrated that such protections benefit the estate and are necessary to preserve estate value. Understanding the UST’s concerns is critical when negotiating with a stalking horse bidder.

(UK) Is 5p enough to cram down HMRC in a Restructuring Plan?

By Rachael Markham on February 28, 2025 Posted in UK

For those in the mid-market who have watched developments in restructuring plans (RP) move from a potential rescue tool, to something prohibitively expensive, the OutsideClinic RP might be one to watch. Not least because the RP seeks to cram down HMRC.

Following RPs proposed by Naysmyth and the Great Annual Savings Company (which were unsuccessful in cramming down HMRC) the appetite to use an RP in the mid-market does seem to have quietened down, despite HMRC subsequently issuing guidance for insolvency practitioners intended to help companies that wish to restructure using an RP.