Nero CVA challenge – part one: The pre-emptive strike (out)

CVA challenges have been in the spotlight recently and the story continues with Nero Holdings Ltd v Young in which the court considered an application to strike out a  CVA challenge claim. Although there is nothing ground-breaking in the court’s reasoning to dismiss the strike out/summary judgment application, its detailed reasoning will offer some helpful guidance and assistance to those involved in these applications.  It will also be helpful to know, following the hearing of the challenge application, how the Court tackles the position where a modification and/or material development occurs following the circulation of the CVA proposal, in particular where substantial votes have already been cast.

Continue Reading

Impact for English Employers as UK Government Delays Easing of COVID-19 Restrictions in England

Road Stop SignLast night, the UK government confirmed what had been widely mooted in the press over the weekend – that there will be a four-week delay to the easing of COVID-19 restrictions in England and that the Step 3 restrictions will remain in place for now. The government’s intention is that England will move to Step 4 (the lifting of all restrictions) on 19 July, but it has promised to review the data again in two weeks in case the risks have reduced.

Our employment colleagues have produced an alert covering what this means for English employers.

Pursuing An Insolvency Claim May Be Much More Expensive Following this Recent Decision (UK)

Symbol of law and justice in the empty courtroom, law and justice concept.The recent case of Manolete Partners Plc v Hayward and Barrett Holdings Ltd [2021] EWHC 1481 (Ch) impacts both insolvency practitioners and assignees of insolvency claims, potentially making such claims more expensive to bring and a procedural burden by requiring (depending on the nature of the pleaded claims) two sets of proceedings, even though the claims arise from the same facts.

Although the judge reached his conclusions “with regret” – and those conclusions essentially arise because of the constraints of the insolvency legislation – the findings are not helpful for insolvency practitioners seeking to pursue insolvency claims.  More so for smaller value claims given the additional disbursement costs, and costs of two sets of proceedings, which could tip the cost/benefit scales against pursuing them.

Assignees of insolvency claims should also note the findings, although we have no doubt that litigation funders will do their best to find a workable solution to the problems that this case creates.

For those practitioners who are currently pursuing an insolvency claim using the procedure in the Insolvency Rules 1986 (the Rules), they should be alive to the fact that a respondent to those proceedings (or indeed the Court itself) may well seek an order requiring the applicant to pay an additional court fee to continue it, if part of the claim should have been issued using the Part 7 procedure (see further below) in order to remedy what this case has identified to be, a procedural defect.

Continue Reading

UPDATED Global Insolvency Report: Impact of Covid-19 on Insolvency Laws

Distributed ledger technologyBoth Spain and Italy have introduced recent changes to their insolvency laws.

The changes are covered in our global guide and cover:

Spain

  • The obligation for a debtor to file for bankruptcy within two months of becoming insolvent is suspended until December 31 2021.
  • Updates to the Modification of the Creditor’s agreement measures.
  • Postponement of the duty to request the opening of the liquidation phase of the insolvency proceedings has been extended until December 31 2021.
  • Updates to the refinancing agreement measures.
  • The period of the expanded Employment Adjustment Subsidy will be extended.
  • Updates to the measure for financing and payments made by persons especially related to the debtor.

Italy

  • The deadlines of arrangements with creditors and restructuring agreements due in the period between February 23 2020 and December 31 2021, are extended by six months.
  • The new Insolvency Code has been postponed to September 1 2021.

Updated: Guide To Financial Support Measures Across Europe And The Middle East

Our most recently updated guide includes updates for the UK, UAE, Germany, the Czech Republic, Italy.

In brief, the updates include:

UK

  • Updates to the Coronavirus Job Retention Scheme (CJRS), Statutory Sick Pay (SPP) and VAT deferral scheme.

United Arab Emirates

  • An extension to the TESS scheme

Germany

  • Updates on Bridging Aid available to small and medium-sized companies, and applications for extraordinary financial and hardship assistance applications
  • AID for Vaccine Glass Production

Czech Republic

  • Changes to applications for Programme COVID-2021

Italy

  • Updates on the SACE S.p.A. (the Italian Export Credit agency) being authorised to grant a public guarantee in favour of financial institutions (national or international) that provide loans to companies.
  • The Guarantee Fund for Small and Medium Enterprises measurers have been updated and are now available until December 2021.
  • Additional guarantee fund for portfolios of medium-long term financing to SMEs for research and development projects and investment programs are now available.
  • The Pool of Business Assets allocated exclusively to support the Italian productive system by Cassa Depositi e Prestiti (CDP) will be available soon.
  • A Fund for the support of shutdown economic activities has been ordered.
  • Increases to the endowment of the fund for the support of internationalization and the endowment of the revolving fund
  • Updates to the sanitation purpose and inventory tax credit
  • Updates to the Tax exemption from Local Municipal Tax (IMU) for tourism sector.
  • Update to the Financial support to large companies for 2021.

Is Greater Than Really Equal To? Sales of Over-Encumbered Property under Section 363(f)(3)

Even prior to the COVID-19 pandemic, most retail bankruptcy cases involved at least some effort to maximize value by selling real estate holdings. The Bon Ton Stores, Forever 21, Sears, and Toys ‘R’ Us cases, among others, are perfect examples. These cases have, for the most part, achieved such sales under section 363(f) of the Bankruptcy Code with minimal resistance, typically on expedited time-frames. The lingering impact of the pandemic will likely continue to cause more distress to retail real estate owners who have seen dwindling revenues as a result of shut downs, capacity restrictions as well as government-mandated rent deferrals. Indeed retail real estate has been one of the hardest hit markets by the COVID pandemic.  This unprecedented revenue depletion will undoubtedly pose new and significant challenges to debtors seeking approval of real property sales free and clear of liens under section 363(f); decreased revenues often correlate directly with decreases in collateral value, which often falls below that of the secured debt. Therefore, depending on a particular court’s interpretation of section 363(f), the ability to sell property free and clear may become more challenging.

Continue Reading

What do UK administrators need to know about connected party sales?

Wooden singpost with "help, support, advice, guidance" arrows against blue sky.Three weeks after the introduction of the mandatory requirement to obtain an evaluator’s report or seek creditor approval before completing a substantial disposal of a company’s business or assets to a connected person, we have updated our Q&A to include new answers in light of the Insolvency Service’s guidance and following discussions with our clients.  The updated Q&A can be accessed here and sets out key questions that UK insolvency practitioners should consider before, during and after completion of a connected party sale.

Regis – Another Loss For UK Landlords In Their Battle Against CVAs

Hair cuttingFollowing in the footsteps of the New Look CVA challenge judgment (see our blog here) it was not unsurprising that Zacaroli J dismissed all but one of the landlord challenge claims when handing down his judgment in Regis.

The Regis CVA challenge has been ongoing since November 2018. Initially it was thought (following Regis entering into administration and the CVA terminating) that the challenge application would fall away, but with questions still remaining – such as whether the nominees/supervisors should be ordered to repay their fees if the landlords were successful with their challenge – the challenge continued.

Continue Reading

New Draft UK Legislation- Ability to Disqualify Directors of Dissolved Companies

On 12 May 2021, the UK Government introduced the snappily titled “Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill”.

As the title of the bill suggests, it seeks to amend the applicability of the directors’ disqualification regime to directors of dissolved companies. A summary of the current regime is summarised in this note on directors’ duties in the context of companies that are (or may become) insolvent. Continue Reading

Updated: Guide To Financial Support Measures Across Europe And The Middle East

Our most recently updated guide includes updates for Germany, the Kingdom of Saudia Arabia and Prague, notably:

Germany

  • Based on the “Guideline for Federal Funding of Production Plants for Borosilicate Tubular Glass and Glass Vials for Use in Vaccine Production”, the BMWi is funding important products for vaccine supply in Germany.

Kingdom of Saudi Arabia

  • The Deferred Payments Programme has been further extended to the end of Q2 of 2021.
  • The Loan Guarantee Programme has been further extended until March 2022.

Prague

  • There is a new COVID support programme for bath houses.
  • The COVID support programme for Culture/Audio Vision has been removed.
LexBlog