In the recent case of Re Active Wear Limited (in administration), the High Court ruled that the purported out-of-court administration appointment by a sole director of a company with unmodified model articles, was valid notwithstanding the earlier High Court decision in Re Fore Fitness Investments Holdings Ltd  EWHC 191 (Ch). We have set out below to what extent this new case law clarifies the parameters within which a sole director can place a company into administration.
In this alert Masi Zaki and Kate Spratt considers the new powers that Australian market regulators will soon have to conduct virtual investigations and examinations, and how the proposed new laws mean that Regulator enquiries and examinations are likely to become more prevalent.
Brought in with the intention of protecting viable businesses from eviction or other enforcement measures in relation to rental arrears accrued as a result of COVID-19 lockdown restrictions, the arbitration scheme (the “Scheme”) provided for under the Commercial Rents (Coronavirus) Act 2022 (the “Act”) has now ended.
Its expiry sees the lifting of all remaining restrictions on winding-up petitions and Commercial Rent Arrears Recovery (CRAR) action introduced in an effort to protect businesses. As a result, no further referrals can be made under the Scheme and for landlords, all rights and remedies are restored.
Following the UK government announcing that UK businesses will benefit from a reduction in energy costs to help combat rising energy costs, details of the proposed scheme have now been released.
Under the scheme, a discount will be automatically applied to the bills of those businesses that are eligible to receive it, namely businesses that are:
- on existing fixed price contracts that were agreed on or after 1 April 2022
- signing new fixed price contracts
- on deemed / out of contract or variable tariffs
- on flexible purchase or similar contracts
As global economies continue to experience uncertainties, it is likely that financial service providers and their dealings with consumers and small businesses will come under the microscope. Masi Zaki and Kate Spratt consider those issues from the perspective of of Australian Financial Service Licence holders in our latest alert.
Last week, the new Prime Minster announced a 6 month scheme to help businesses with rising energy costs. Although further details are awaited, the scheme is likely to reflect the support being provided to consumers, by offering a guarantee that discounts the unit costs for gas and electricity. Recognising that businesses have not benefitted from Ofgem’s price cap and may have been unable to fix their energy prices, this will provide comfort to those businesses that are particularly reliant on gas and electricity. It may also help to reduce inflation, which has also reached levels not seen for decades. However it is likely to take some time before inflation gets back to the Bank of England’s targeted 2% and energy costs are still high. For many businesses this support might see them through the winter months, but with other issues such as supply chain challenges and the level of debt many businesses are carrying will this be enough?
Not too early, is the warning from the recent case of E Realisations 2020 Limited.
HMRC as the UK tax authority is often the largest creditor in any insolvency, but has not always been willing to engage in the process. This has caused viable restructuring proposals to fail for lack of support and this sometimes results in HMRC not achieving the best return. HMRC recognise that this stance has frustrated Insolvency Practitioners trying to achieve a restructuring. So, is this is about to change?
There has been very little to indicate how HM Revenue and Customs (“HMRC”) might approach a restructuring plan (RP), following HMRC’s preferential status being restored in 2020.
The reinstatement of HMRC as a preferential creditor potentially makes company voluntary arrangements non-viable if HMRC do not support, but what about RPs? RPs introduced for the first time, the ability for the court to ‘cram down’ creditors who vote against it.
In the recent case of Houst, this is exactly what the court did, cramming-down (and therefore binding) HMRC to the terms of the plan even though HMRC voted against it.
But, how did the court justify exercising its cram down power in light of HMRC’s preferential status?
In PGD (in liquidation) Manolete Partners plc v Hope Mr Justice Zacaroli considered whether it was possible and/or appropriate to limit the quantum of relief granted in insolvency litigation to the amount required to pay the liquidation debts, costs and expenses where the claim had been assigned to a third-party litigation funder.
Zacaroli J held it was not clear whether the court possessed the power to do so but, even if the jurisdiction did exist, it should not be exercised to deny a third-party litigation funder innocent of any wrongdoing from the proceeds of the claim.
(The below article first appeared on LexisPSL R&I and is republished with consent. It was written by Paul Wright, a barrister at 9 Stone Buildings who appeared for the appellant in this matter (with Joe Curl QC) and was instructed by Squire Patton Boggs)