South Square & Mourant
Litigation Forum 2021
Below is our two-minute read covering the 'Top Takeaways' from our 2021 Litigation Forum:
1. Keynote: Paul Donovan, Chief Economist at UBS Global Wealth Management
We are in the midst of a the fourth industrial revolution and the world is undergoing the most dramatic period of structural change since the industrial revolution, accelerated as a result of the pandemic. Policy makers must avoid resorting to ‘scapegoat economics’ which blames minority or unrepresented groups and even corporate sectors. Rather, the challenge is to develop policies which are aligned with the processes which characterise this fourth industrial revolution.
2. Can a Trust be Insolvent?
Whilst a trust cannot be insolvent under English law, in Jersey and Guernsey, a creditor who knows that it is dealing with a trustee acting as trustee may find its ability to recover limited to the value of the trust assets and with no recourse to the personal assets of the trustee. The Jersey and Guernsey courts are developing an insolvency type regime to deal with this and are currently dealing with difficult questions, particularly with regard to the order of priority of the respective creditors and trustees. However, creditors are vulnerable and may find themselves ranking on a first in time basis and behind the claims of the trustee.
3. Brexit: Full of sound and fury?
Post-Brexit, the insolvency system which remains is much more uncertain both in relation to insolvency procedures and restructuring. Now, consideration needs to be given to each EU member state in which recognition of proceedings and decisions might need to be established, necessitating consideration on a jurisdiction by jurisdiction basis.
4. The New Restructuring Plan
There are key differences as well as similarities between Schemes of Arrangement and the new Restructuring Plan. And there are lessons to be learnt from the case law about creditors being given access to information. Specifically, there is a duty on the company to provide information to a creditor for the purposes of understanding the Plan, and failure to do so may itself provide a ground for challenge. Equally, there is also a duty on a creditor to be proactive and seek information early, resorting to using remedies under the CPR, if necessary. Further afield, we are seeing increasing reluctance of the court in Hong Kong to sanction parallel schemes in two different jurisdictions. A company must now positively persuade the court that a parallel scheme is in the interests of unsecured creditors and would serve a useful purpose.
Watch a full recording of the event here: