Insolvency Blog -

A recent Freedom of Information Act request revealed that Premier League and Championship Football clubs between them owed nearly £4million to HMRC under ‘Time to Pay’ (TTP) agreements. Such information may soon be a thing of the past as HMRC has advised that it is currently ‘considering the release of statistics for TTP’ and that whilst the review is ongoing it is unable to provide statistical information for the Business Payment Support Service which operates all TTP arrangements. Since inception of the service the statistical information released by HMRC has confirmed the extent to which...

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Rubin & Lan v Eurofinance involved a "novel, though we believe inevitable and desirable, development of the common law" (according to Lord Justice Ward). Founded on the principles of modified universalism (insolvency proceedings are collective, dealing with all assets for all stakeholders, but jurisdictional differences cannot be ignored), it builds on the relatively recent House of Lords cases of Cambridge Gas and HIH Insurance. In essence a foreign insolvency representative can have the English courts enforce a foreign insolvency judgement (such as recovery of a transaction at an undervalue or a preference) in circumstances where they would not be able...

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We all know the definition of insolvency for a company - or do we? The cashflow test - unable to pay its debts as they fall due - is relatively uncontroversial, but the balance sheet test is more difficult. Section 123(2) Insolvency Act 1986 has rarely been subject to judicial interpretation, moving the Chancellor (Sir Andrew Morritt) to say in BNY Corporate Trustee Services Ltd v Eurosail- UK 2007- 3BL Plc & Ors [2010] EWHC 2005 (Ch): "this appears to be the first time the proper interpretation of the requirement in s.123(2) to "[take] into account [the company's] contingent and prospective liabilities" has required...

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Guarantee-stripping - the compromise of a landlord's claim against the guarantor of a tenant debtor - also known as the Powerhouse principle, has been endorsed by the High Court as a valid legal mechanism within a CVA, as long as the compromise is not unfairly prejudicial. In a judgement that was highly critical of Peter Hollis and Nick O'Reilly, then of Vantis PLC, who proposed a CVA as administrators of Sixty UK Limited, the "Miss Sixty" retailer, Henderson J found that a landlord could have been crammed down in this way, but was in fact unfairly...

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Commercial landlords and insolvency practitioners are all alive to the effects of the decision of HHJ Purle QC in Goldacre (Offices) Ltd v Nortel Networks UK Ltd [2009] EWHC 3389 (Ch) (07 December 2009), that rent is an administration expense when it falls due during the administration. Gabriel Moss QC has however written a fascinating analysis in Insolvency Intelligence ((2010) 23 (5) Insolv. Int. 76), concluding that Goldacre failed to follow the Court of Appeal's approach to administration expenses in Re Atlantic Computer Systems plc, which he says was unaffected by the House of Lords decision in Re Toshoku Finance (UK) plc (in...

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The previous Government's support in giving businesses time to pay their their debts to HMRC via the Business Payment Support Service (BPSS) has been widely acknowledged as having provided a lifeline to many businesses. Continued support was assured in their March 2010 Budget although from the increasing number of referrals we have seen in recent weeks there are clear signs that HMRC are taking a stricter view when dealing with outstanding debt. This experience has been supported by information released by HMRC showing there has indeed been an increase in the number of applications being rejected with the rate having risen...

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Portsmouth FC's administrators' proposals to creditors make fascinating reading. Their accessibility highlights the Football Association's football creditors rule, which requires players, clubs and agents to be paid often very large sums in full, while non-football creditors including charities such as St John Ambulance, ordinary business suppliers and HM Revenue & Customs, receive only pence in the £ through a Company Voluntary Arrangement (CVA). HMRC lost its legal argument against the football creditors rule in 2004 in the High Court and the Court of Appeal in the Wimbledon FC case. There, HMRC was a preferential creditor, but analogous arguments...

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Credit Today reports "OFT weighs up insolvency regulation" on the Office of Fair Trading study of the corporate insolvency market. The OFT is considering whether to recommend that the number of Recognised Professional Bodies (regulators) be reduced to 2 or 3 - or even one. A key issue appears to be the encouragement of trust in the profession and transparency. There is a lack of understanding about insolvency amongst creditors, according to the OFT. I think that is hardly surprising. The profession and the regulators have a lot to do to educate ordinary businesses and consumers. Insolvency is a complex...

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Some landlords struggle with their position in administrations (especially pre-packs) and CVAs, as illustrated by the naturally landlord-centric perspective of insolvency given by the British Property Federation. Landlords are so used to their powers of distraint and forfeiture maintaining their income streams from financially distressed tenants that they can fail to appreciate that formal insolvency will recognise them as mere unsecured creditors (albeit with a property that may or may not have value to the business) alongside all other suppliers. I've talked about the issues of CVAs and Landlords before on this blog and commented on tenant insolvency under...

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You will be delighted to know that The Insolvency (Amendment) Rules 2010 are not the only piece of insolvency legislation coming into effect on 6 April 2010. The main insolvency rules changes are joined by The Insolvency (Amendment) (No. 2) Rules 2010, which correct a number of errors in the first attempt! Succinctly and memorably named, The Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2010 makes the changes to The Insolvency Act 1986 required to give proper effect to the rule changes. The new statutory forms required by all this legislation are listed on and should be available from the Companies House website. ...

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