Special resolution regime

Reforms

The Bank Recovery and Resolution Directive (EU BRRD), Directive 2014/59/EU created a harmonised recovery and resolution framework for credit institutions and investment firms in the EU. Member States were required to adopt and publish the necessary laws and regulations in order to transpose the Directive by 31 December 2014, and to apply them from 1 January 2015 (for further details, see Practice Note: EU Bank Recovery and Resolution Directive (EU BRRD)—essentials). The Bank Recovery and Resolution Directive II (EU BRRD II), Directive (EU) 2019/879 amended EU BRRD. All EU Member States (including the UK) had to implement EU BRRD II by 28 December 2020. Through the implementation of the EU BRRD, banks across the EU have a common set of tools with which to address insolvent and distressed banks and other financial institutions.

The Bank Recovery and Resolution Order 2014 (BRRO 2014), SI 2014/3329 came into force on 1 January 2015 to implement the EU BRRD, and made a number of amendments to the special resolution regime (SRR) in the Banking Act 2009 (BA 2009), including bail-in powers. Amendments are also made to the

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Restructuring & Insolvency analysis: This was an application for an injunction to restrain presentation of a winding up petition. The respondent was a company which asserted that it was entitled, pursuant to a term sheet prepared during loan negotiations, to a £350,000 break fee and certain other sums. The applicant’s main argument was that it had a cross-claim in misrepresentation which meant that (1) the term sheet, to the extent that it had contractual force, had been rescinded and (2) there was in any event a damages claim large enough to extinguish the alleged debt. It was held that there was sufficient evidence of misrepresentation to meet the test. The applicant was entitled to an injunction. Written by Nora Wannagat, barrister at Tanfield Chambers.

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This week's edition of Restructuring & Insolvency weekly highlights includes: the publication by the Insolvency Service of its monthly insolvency statistics for November 2024, an examination of the meaning of ‘unregistered company’ under section 220(1) of the Insolvency Act 1986 (IA 1986) (East Riding of Yorkshire Council v KMG), analysis of the Commercial Court’s guidance on pleading and proving claims under IA 1986, s 423 (Invest Bank PSC v El-Husseini), plus a round-up of other news and cases for restructuring and insolvency professionals.

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Restructuring & Insolvency analysis: The court dismissed the applicants’ applications to remove and replace the joint administrators. The administrators’ decisions fell within the range of decisions that were open to them, even though further renegotiations with the secured creditor (Desiman) and the purchaser’s ‘chipping’ at the purchase price during turbulent economic conditions eroded the prospect the applicants would receive an economic return in the administration. In that respect, Desiman could be said to have driven a hard commercial bargain, but that was not a circumstance for which the administrators were ultimately responsible. Nor was it sufficient for any of the allegations to be made out. Written by Samuel Parsons, barrister at Erskine Chambers.

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