Insolvency Bitesize

This edition of Insolvency Bitesize is set against the backdrop of the developing “EFF crisis” with squeezes on energy, food and fuel creating uncertainty for the future. But while the shelves may be empty, developments affecting the restructuring and insolvency market are far from being in short supply. As ever in periods of uncertainty, it pays to stay focussed.

The All Party Parliamentary Group on Fair Business Banking Report on “Resolving Insolvency” was published last month. It was highly critical of the IP industry, the regulatory framework and the practice around taking appointments. R3 has made clear its disappointment with elements of the report and its lack of understanding of the framework. We can see that many of the proposed changes could have broader, and unintended, repercussions for both the lending and corporate rescue environment. With the Government due to report shortly on its consultation into the IP regulatory framework, it seems likely that the report and its proposals will attract further attention. We know that many of you have strong opinions about how representative this report was of modern practice and would be keen to continue the conversation.

Around the same time, the Insolvency Service published its annual plan for 2021 to 2022. One notable inclusion was its plan to work on proposals for whether to incorporate the Model Law on Recognition and Enforcement of Insolvency-Related Judgments into the UK legislative framework. It will involve, in large part, a decision as to whether to retain, modify or reject the Gibbs rule. That could well determine the state of the UK restructuring and insolvency market for years to come, have ramifications for the cost of borrowing and even the attractiveness of English law in international finance.

We recently advised Caffè Nero whose nominees and directors were fully vindicated by the High Court’s rejection of all allegations of material irregularity and unfair prejudice brought by a disgruntled landlord against Caffè Nero’s CVA (which had secured the overwhelming support of creditors late last year). If you’ve not seen it already, have a read of our client alert which highlights the key takeaways for IPs.

In this edition of Insolvency Bitesize, we take a look at:

  • three separate cases involving the recognition in the UK of foreign insolvency and restructuring procedures in Singapore, Russia and France. While the issues in each were distinct, seen together they underscore the continued relevance of the Gibbs principle for English law obligations and the limits of common law recognition assistance;
  • what the new temporary insolvency practice direction, a case involving a statutory declaration taken in Israel and the revised practice for dealing with winding-up petitions might mean for out-of-court administration appointments; and
  • a round-up of other issues, including the Pensions Regulator’s final guidance policy on how it will investigate and prosecute its new criminal powers under the Pension Schemes Act 2021, the court’s construction of a settlement agreement and how it benefitted former administrators (though possibly not their legal advisors) and a reminder of the new rules governing the procedural aspects of the standalone moratorium procedure.

We hope you find this edition useful. As ever, please get in touch with any questions you may have.

Topics covered in this report

1

No recognition of Singaporean moratorium as Scottish Court of Session applies the Gibbs principle

The Scottish Court of Session recently refused Prosafe’s petition for recognition of its Singapore moratoria in the UK under the Cross Border Insolvency Regulations 2006. Put simply, the CBIR could not be used to side-step the effects of the Gibbs principle in respect of English law governed claims which simply fell outside of the Singapore restructuring accordingly and could not be restricted by it. 

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