Insolvency Insight - Issue 3 | July 2021

• Published date: 27 July 2021
• Subject Matter: Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy
• Law Firm: Quadrant Chambers
• Author: Turlough Stone

Welcome to the next edition of the insolvency insight bulletin from the insolvency specialists at Quadrant Chambers. All cases link to the relevant judgments.

Legislation

Readers are reminded that the exemption for small business suppliers from the prohibition on enforcement of ipso facto clauses in contracts for the supply of goods and services (in s.233B IA 1986) ended on 30 June 2021. The impact could be considerable, given that the exemption applied to companies with an annual turnover of up to '10.2 million and/or balance sheets up to '5.1 million and/or up to 50 employees, and suppliers can only terminate upon a customer's insolvency in the limited circumstances set out in s.233B(5) IA 1986.

Case Law

• Official Receiver v. Deuss [2021] EWHC 1842 (Ch). In the first reported decision on costs relating to an application under s.133 IA 1986, Chief ICC Judge Briggs has refused to make a third party costs order against a liquidator who had requested public examination of an individual, following that individual's successful resistance to the application. The liquidator was not the "real party" to the application because he had not made the request in a personal capacity, nor had he funded or controlled the application (that being in the hands of the Official Receiver).
  
• Re Hurricane Energy PLC [2021] EWHC 1759 (Ch). For the first time since the introduction of Part 26A IA 1986 in June last year, the Court has refused to sanction a restructuring plan which had been rejected by 92% of shareholders whilst approved by 100% of bondholders. Zacaroli J was not satisfied that one of the threshold requirements for a "cross-class cram-down" in s.901G IA 1986 (the "no worse off test") was met in circumstances where the "relevant alternative" was the company's continued trading rather than immediate liquidation.
  
• Lakatamia Shipping Co Ltd v. Nobu Su [2021] EWHC 1866 (Ch). In allowing the claimant judgment creditor's appeal against the refusal of its application to annul a bankruptcy order against the judgment debtor, Bacon J held that "place of residence" for the purposes of s.263I(2)(b)(ii) IA 1986 should be given its natural and ordinary meaning, and the focus of enquiry should be on whether the debtor's address was his usual place of abode or home and was occupied with a degree of continuity.
  
• Re DTEK Energy BV [2021] EWHC 1551 (Ch). In sanctioning two inter-conditional schemes of arrangement (in the face of opposition from one scheme creditor) Sir Alistair...