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Cross Border Insolvency Update - September 2020

Re Virgin Atlantic Airways Ltd [2020] EWHC 2376 (Ch)

The High Court approved the first restructuring plan to come before the courts under Part 26A of the Companies Act 2006, introduced by the Corporate Insolvency and Governance Act 2020.

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East-West Logistics LLP v Melars Group Limited [2020] EWHC 2090 (Ch)

The English court had jurisdiction to wind up a company which had moved its registered office to Malta in order to avoid enforcement of a judgment. The registered office was no more than a "letter box", and the company's Centre of Main Interests was in England.

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Short stories

Corporate Insolvency and Governance Act 2020 (“CIGA”)

CIGA has introduced a number of changes to UK insolvency law, with a focus on rescuing and restructuring companies. These reforms include a new restructuring plan (which is somewhat based on the US Chapter 11 proceedings), a new moratorium process and the disapplication of supplier termination of contract provisions along with various temporary measures to help businesses to deal with the coronavirus pandemic. The moratorium process has already been used a couple of times. More information on CIGA can be found here.


Extension of Insolvency Moratorium in Germany for companies affected by coronavirus

At the outset of the coronavirus pandemic, in March, Germany granted a moratorium to allow companies facing financial difficulties as a result of the virus further time before filing for bankruptcy. This was due to run until September, but the coalition government have agreed to extend this moratorium further in order to avoid a wave of insolvency filings. It is not yet clear how long the extension will last, but it is likely to last at least until the end of the year. The extension is not thought to be granted for companies which are already clearly insolvent.

STA Travel files for insolvency in Switzerland, New Zealand and Australia

The The Swiss parent company of STA Travel has filed for insolvency in Zurich and is to appoint administrators. The company’s New Zealand and Australian branches have been placed into liquidation. The travel business has put their financial difficulties down to the decline in sales as a result of the coronavirus pandemic. It is currently not clear what will happen with branches elsewhere, but is has been reported that the Travel Agent is currently reviewing the situation. STA Travel’s UK subsidiary has ceased trading and it is possible that more subsidiaries in other countries might follow into an insolvency process. In a company statement STA Travel said that the coronavirus “has brought the travel industry to a standstill”.

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