United Kingdom, Squire Patton Boggs updates

Insolvency & Restructuring

Contributed by Squire Patton Boggs
Can retailers use a CVA to rewrite existing lease arrangements?
  • United Kingdom
  • 12 February 2021

Increasing pressures placed on those operating in the retail and hospitality sectors as a result of COVID-19 means that there is likely to be an increasing use of company voluntary arrangements (CVAs) in these sectors. The intention would be to help support and restructure businesses in distress, but could retailers use a CVA as a mechanism to rewrite the terms of their leases?

Failure to abide by deed of priority may result in appointment of administrators being void
  • United Kingdom
  • 11 December 2020

A recent case is a cautionary reminder to qualifying floating chargeholders (and their advisers) to review the terms of all security documents before seeking to appoint an administrator. In this case, failure by junior chargeholders to obtain consent from senior chargeholders (as required under a deed of priority) prior to the appointment of administrators led to the court finding that the out-of-court appointment of administrators was invalid (as opposed to being a procedural irregularity that could be cured).

Money transfer for specific purpose – High Court ruling on Quistclose trusts
  • United Kingdom
  • 27 November 2020

Quistclose trusts classically arise in situations where loans are made for a specific purpose. Disputes over Quistclose trusts often arise in insolvency situations. In a recent case, the High Court found that a Quistclose trust had arisen in a situation where solicitors were forwarded monies by a third party for a specific purpose.

Have qualifying floating chargeholders lost control over the UK administration appointment process?
  • United Kingdom
  • 06 November 2020

In a recent case, Insolvency and Companies Court Judge Jones dealt another blow to qualified floating charge holders' (QFCH's) control by finding that failure to serve a notice of intention to appoint administrators by directors of a company on a QFCH does not automatically void an administration. This finding may come as a surprise given that the reason for giving notice is to enable a QFCH the opportunity to appoint its preferred choice of administrator.

Mandatory independent scrutiny of pre-pack sales to connected parties to be introduced
  • United Kingdom
  • 23 October 2020

The government recently published a report reviewing voluntary measures introduced in 2015 to improve the transparency of pre-pack sales in administration. The voluntary measures sought to improve creditor confidence, enabling connected person purchasers to voluntarily obtain an independent opinion from the Pre-Pack Pool that the proposed sale was the best option. The government's report notes that despite these measures, pre-packs are still a concern.

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