Insolvency Blog

Some interesting points from the day were that zombie companies remain an issue, not only in the UK, but in much of Europe and beyond. The solution in the UK is political, but probably not readily politically palatable. Banks, led by those owned by the taxpayer and therefore subject to government requirements, should be told to allow the resources locked up in underperforming credits to be released into the wider productive economy. Specifically, the banks should be told to mark them to market. Hoping that their value will be restored by the passage of time will in most cases be...

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As an IP, I am in a minority here today - so too as a Brit! Finland has exactly the same zombie company experience as we do in the UK. The Czech Republic on the other hand has a banking community that is promoting restructuring hard (and Slovakia and Slovenia have yet to get there). A straw pole of some I've spoken to suggests world economic growth raising raw materials prices - and interest rates rising - so that more of western Europe will see restructuring in about 18 months time. British politics has not yet woken up to the...

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RTI has now been with us for over a month and employers should have submitted their April 2013 Full Payment Submission (FPS) giving details of PAYE/NI due to HMRC. Furthermore, the employers annual return form P35 for 2012/13 should have now been submitted to HMRC; if not penalties and interest on late submission and payments due are now running. In our experience, employers in financial distress have in the past used the Crown departments as a source of working capital.  Typically, employee deductions for PAYE and NIC will not have been paid for some months or, in some instances, when...

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In the leading judgement in the Court of Appeal in HSBC Bank plc v Tambrook Jersey Limited [2013] EWCA Civ 576, Davis LJ approved Lord Hoffman’s reference in re HIH Casualty & General Insurance Limited [2008] UKHL 21 to “the principle of (modified) universalism, which has been the golden thread running through English cross-border insolvency law since the 18th century.” Davis LJ made reference to the leading case, Rubin v Eurofinance [2012] UKSC 46, which commentators have identified as stepping away from the modified universalism principle (with the exception of the dissenting view of Lord Clarke). I wonder whether Mann J at...

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The insolvency regulators are currently revising the guidance to insolvency practitioners on pre-pack administrations. This provides a golden opportunity to facilitate a change in behaviour in those few practitioners who have not complied with the intended spirit of the guidance, or who are minded not to comply.  It is crucial for the revised SIP to emphasise more prominently the need for the administrator to explain clearly to creditors why the process was in the interests of creditors as a whole.  On the other hand, over-emphasising a check-list of disclosure requirements would risk encouraging those who might still wish...

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The Supreme Court has decided (BNY Corporate Trustee Services Ltd & Ors v Neuberger [2013] UKSC 28) that the balance sheet test in s123(2) Insolvency Act 1986 requires “a petitioner to satisfy the court, on the balance of probabilities, that a company has insufficient assets to be able to meet all its liabilities, including prospective and contingent liabilities”. Lord Walker’s leading judgement given on 9 May 2013 makes clear that “the point of no return” or “the end of the road” (concepts that have been in use since the Court of Appeal decision in March 2011) are not...

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The Lehman/Nortel pensions appeal is due to be heard by the Supreme Court on 13 May 2013.  The High Court and the Court of Appeal decided that Financial Support Directions and Contribution Notices issued by the Pensions Regulator after the target company has gone into administration rank as administration expenses.  Will the Supreme Court stop the erosion of the rescue culture and recognise such liabilities as unsecured? My views on the current problems with the administration expense regime and potential solutions are shown in a recent webcast . The higher courts may assist, but if not we will need legislation...

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The UK government has decided to opt in to the proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No.1346/2000 on insolvency proceedings. Jo Swinson, the Insolvency Minister, noted when making the announcement that the UK government will now participate fully in negotiations on the draft text of the amended Regulation, that the proposed amendments will benefit UK businesses affected by insolvency in the EU.  The proposed amendments are broadly supported by all the member states, whilst the UK has been particularly active in working with the Commission to formulate the proposals....

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At its recent meeting in Basle, INSOL Europe's Council was unanimous in electing Chris Laughton to Honorary Membership of the association, in recognition of his meritorious service to the insolvency profession and outstanding work on behalf of the association as its president in 2010-11 and in relation to Eurofenix, the European Insolvency Regulation Case Register and communication. ...

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The main focus of publicity regarding HMRC’s Real Time Information (RTI) has been the administrative burden it will impose on small businesses up and down the country. Under the scheme, from 6 April 2013, all employers are required to file information with HMRC relating to payments under the PAYE system as soon as they have been made.  HMRC has provided limited short term relief by allowing those employers with less than 50 employees to delay filing the relevant information until the end of the month in which the payment is being made.  Welcome though this may be in taking...

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