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Cross Border Insolvency Update - August 2018

MF Global [2018] EWCA Civ 1327

In an urgent application, the Court of Appeal held that a CVA should be precluded from becoming effective where an unanticipated claim of €126.7m was submitted after the CVA was approved but before the statutory bar on new claims had lapsed. 

The Special Administrators of MF Global UK Limited proposed a CVA which was approved by creditors in December 2017. Almost all creditors had already recovered 90% of debts due to them. This case was argued by two groups of creditors, the "Exiting Creditors" and the "Participating Creditors". Under the terms of the CVA, the Exiting Creditors would be entitled to a final cash payment of 9.75/£ and would have no further interest in the special administration. This payment would be funded by the Participating Creditors who would provide £64 million to buy out the Exiting Creditors, and in return would have a larger share in the remaining Administration. The Participating Creditors were said to have a higher "appetite for risk" with the potential to receive anywhere from 6% more than the Exiting Creditors to 4% less than them. 

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Court of Appeal provides clarification on the service of claims out of the jurisdiction under s.423 of the Insolvency Act

The Judgment handed down by the Court of Appeal in Orexim Trading Ltd v Mahavir Port And Terminal Private Ltd (formerly known as Fourcee Port and Terminal Private Ltd) [2018] EWCA Civ 1660, [2018] All ER (D) 101 (Jul) on 13 July 2018 provided important clarification as to the service of claims under s.423 of the Insolvency Act 1986 ("IA 1986") out of the jurisdiction. 

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Short Stories

German solar panel manufacturer SolarWorld facing dissolution if investor cannot be found

Creditors of insolvent German solar panel manufacturer SolarWorld recently agreed with its Administrator's proposal that the company should be dissolved if an investor cannot be found by September 2018.  The company is currently trading under the Administrator's supervision but is loss-making.  The Administrator cited a lack of prospective future work and the general economic and market conditions in the industry as being key factors in the company's demise. The solar panel industry has seen a decline across several jurisdictions.  

If an investor can be found in this timescale, some of the 500 strong workforce could avoid redundancy. However, plans are already being implemented to mitigate the potential effects of the dissolution of the company should it collapse.

Apple retailer Stormfront reports pre-tax loss of £475,000

Stormfront, one of the UKs largest official resellers of Apple products, reports facing a short-term downturn following a pre-tax loss of £475,000 between September 2016 and September 2017, down from a £28,000 profit the year before. It attributes the loss in part to falling sales across its stores and particularly that the demand for iMacs and MacBooks has fallen.

Dan Evans, Stormfront's finance director, stated that profit margins were already thin for some products and additional pressures came following the reduction of wholesale discounts. Cuts have already been made both at store level and within the company's head office to mitigate further losses. However, the retailer reported that its repairs division had performed well.

Poundworld confirms all stores are set to close

The discount retailer known for its single-pound prices entered Administration in June this year but has failed to find a buyer for the business. As a result, Poundworld has since confirmed that it will be closing all of its remaining stores, as well as its head office, in addition to the 145 stores already closed.

As a result of the further closures, a further 2,600 jobs will be lost. The remaining stores are due to be closed by 10 August 2018. 

Despite the further planned closure, discussions between the company's Administrators and potential buyers for parts of the remaining business are said to be continuing.