How Should UK Officeholders Deal with Notices Where the Rules Require Information that is Irrelevant?

By Livia Giordano on Posted in UK

In the case of Caversham Finance Limited (in administration) [2022] EWHC 789, the court considered whether errors in a notice to creditors seeking consent to extend an administration made the extension invalid. This case is important as it shows the court’s approach to omission of prescribed information in notices to creditors.

The information that was omitted in the notice to creditors in this case was also the subject of comment in the recent Government report reviewing the Insolvency Rules (England and Wales) 2016 (the “Report”) (please see our latest alert on this).

This blog provides a brief overview of the case, reflects on the Insolvency Service’s comments in the Report with thoughts on how irrelevant or redundant prescribed information should be dealt with in notices and documents that are required by the Rules to contain prescribed information.

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Smile Telecoms – Second Restructuring Plan Sanctioned

By Squire Patton Boggs on Posted in UK

Smile Telecoms Holdings Limited (“Smile”), a Mauritian company, has recently had its second restructuring plan sanctioned by the High Court in England.  The case contains some important markers for those involved in restructuring plans, particularly those plans which involve international elements or which seek to prevent out-of-the-money creditors from voting on the plan.

Background

Smile’s first restructuring plan had not achieved the desired outcomes and Smile was facing formal insolvency. A new restructuring plan was proposed which provided an analysis that showed creditors would be better off under the terms of that plan, than in a formal insolvency.

Key issues

This case contains a number of useful findings from the court on the following issues:

  • out-of-the-money creditors
  • creditor objections
  • alteration of foreign member’s rights
  • expert evidence

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What are the Proposed Changes to Corporate Control Transactions in Australia?

By Masi Zaki, Kate Spratt and Michael Gajic on Posted in Australia

The Australian government is consulting on a proposal to expand the role the Takeovers Panel plays in control transactions, with an aim of reducing the time and costs of mergers and acquisitions. The proposal includes options for the Takeovers Panel to regulate control transactions by scheme of arrangement.   This article considers the proposed reforms and whether judicial oversight of control transactions by scheme is preferable.

How Might the First Review of the Insolvency Rules Impact Mid-Market Insolvencies

By Livia Giordano on Posted in UK

On 5 April 2022, the UK government published the first review of the Insolvency (England and Wales) Rules 2016 (the Report).  We have produced this alert, that selects a few points from the Report that we think are of interest to practitioners. In particular:

  • proposed changes to the Rule on timing and dating notices of appointment of administrators,
  • the practice of swearing statutory declarations remotely,
  • the impact of the decision in Manolete Partners Plc v Hayward and Barrett Holdings Ltd [2021] EWHC 1481 (Ch) on bringing insolvency proceedings,
  • the engagement of secured creditors in approving fees and consent to the extension of an administrators’ appointment, and
  • the monetary limit on winding-up petitions.

 

 

From Dusk ‘Til Dawn: Hope for the Subchapter V Debt Limitation

By Justin Cloyd on Posted in US

The Small Business Reorganization Act (SBRA), which was signed into law on August 23, 2019, and went into effect as of February 19, 2020, put in place what is commonly known as “Subchapter V” in the reorganization industry. Under the SBRA, a qualified “small business debtor” may elect to be treated as a Subchapter V debtor if, among other things, the debtor’s aggregate, noncontingent, liquidated secured and unsecured debts as of the petition date totaled no more than $2,725,625. Qualification as a Subchapter V debtor would ostensibly make the chapter 11 process more accessible, economical, and beneficial for small business debtors making the election, because the SBRA was designed for smaller business that otherwise cannot afford the administrative fees and other costs associated with traditional Chapter 11 cases (even traditional small business Chapter 11s).  Continue Reading

Evaluating the Evaluation Process for UK Connected Party Sales – One Year On

By Jon Chesman on Posted in UK

It has almost been 12 months since the Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021 came into force on 30 April 2021. The regulations require an administrator to obtain creditor approval or a report from an independent evaluator in advance of completing a “substantial disposal” of the company’s property to a connected party within the first eight weeks of the administration.

We produced the attached FAQ document in April 2021 to explain the key aspects of the regulations and answer key questions about the process.

Having completed a number of connected-party transactions since the regulations came into force, acting for either administrators or buyers, in our experience complying with the regulations has not presented a significant challenge in completing those transactions, although in practice we have found the following:

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(UK) Rent Arbitration – A Useful or Useless Tool?

By Michelle Adams, David Holland and Stephanie Hadley on Posted in UK

Counting payments for homeOften with new legislation, we might introduce it with words such as ‘much anticipated’ or ‘welcome’, but the Commercial Rent (Coronavirus) Act 2022 is for many landlords and tenants, too late, or unnecessary, because deals have already been done in respect of unpaid COVID commercial rent payments.

The Act came into force on 24 March 2022 and provides a mechanism which allows either a landlord or a tenant to apply to an arbitrator to determine what should happen in relation to unpaid commercial rent that accrued during the pandemic when restrictions were in place that prevented businesses from opening.

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Will Contradictors Play an Important Role in Australian Litigation?

By Masi Zaki and Kate Spratt on Posted in Australia

In the common law world, Australia is a global market leader in terms of intense litigation in class action and corporate collapse contexts. It is, therefore, not surprising that contradictors are becoming increasingly common in heavily contested litigation.

In our latest alert in our litigation funding series, we consider whether contradictors will have an important role to play in that litigation.

April Fools: Winding Up Petitions Set to Increase, Is this a Wind Up?

By John Alderton on Posted in UK

From  today (1 April), creditors can present a winding up petition without (a) having to give 21 days to the debtor company to make proposals to pay, and (b) being owed a debt(s) of £10,000.   Given that all temporary restrictions and processes have now ended, the ‘gloves are off’ when it comes to debt collection.

Although presenting a winding up petition incurs a hefty court fee, the effect (or even threat) of a winding up petition can elicit a swift payment to avoid the consequences that an outstanding petition can present to a debtor company, including

  • reputational impact,
  • director duty concerns – wrongful trading/misfeasance,
  • the company’s lender freezing its bank account(s),
  • the risk of making payments that can be clawed back if the company is wound up; and
  • ultimately a winding up order.

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The Effect of Sanctions on Supply Contracts

By Rachael Markham on Posted in Cross Border, UK

The impact of Russia Sanctions has, as we have seen in the US with the first Chapter 11 filing (see our previous blog) started to have an adverse impact on businesses that have connections with Russia.  The impact on supply chains, and the consequences for business remain at the forefront of discussions and in our latest Insight Dr. Christopher Eggers considers the effect of the conflict on German supply chain contracts, although many of the points he discusses are relevant more widely.

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