Insolvency Blog -

Insolvency Lawyers' Association's Response to the draft Insolvency (Amendment) (No.2) Rules 2011 I thoroughly endorse the Insolvency Lawyers' Association's response to the Government's proposed amendments to the law on pre-pack insolvencies, which is accessible at  http://www.ilauk.com/news/insolvency_and_restructuring_news/ and is reproduced below. 1. Introduction 1.1 This is the ILA's summary response to the draft Insolvency (Amendment) (No.2) rules 2011 (the "Draft Rules") published by the Insolvency Service on 16 June 2011. It has been prepared on behalf of the ILA by its Technical Committee (the "Committee"). 1.2 The ILA provides a forum for c.450 full,...

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It is standard practice for UK banks to require anyone giving a personal guarantee whose relationship with the debtor is not purely commercial, typically a wife for her husband’s business, to take independent legal advice and follow the guidelines laid down in the Etridge case [2001]. In a recent case a loan to a hotel development company, of which both the husband and wife were directors and shareholders, was provided on the basis of personal guarantees secured by way of a charge on the matrimonial home. The company ran out funds and the bank appointed Administrative Receivers who sold...

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With continuing demand for its quality gravure printed products, the insolvency of the UK branch of a European network gives rise to an investment opportunity. With orders still to fulfil, cessation of trade was due to a lack of funds to buy consumables – not due the lack of orders. Our TV channels are full of DIY programmes and people across the UK and Europe are getting more and more adventurous about making their house a home. Combined with the decline in new house sales, the renovation and redecorating market is burgeoning. How extraordinary then that a successful UK wallpaper,...

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HMRC’s latest comment concerning ‘Time to Pay’ (TTP) arrangements has stated that TTP will not be available where companies are paying out dividends to their shareholders. It is HMRC’s opinion that the cash should be used to pay tax before paying dividends the company can not afford! This will clearly hit hardest those companies where directors have chosen to receive remuneration on a dividend basis rather than by way of salary. The adoption of HMRC’s stance means that two businesses in a similar financial position will receive different levels of support simply...

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 The Insolvency Service is still "in listening mode" in relation to its February 2011 Consultation on Reforms to the Regulation of Insolvency Practitioners, according to a presentation on 15 June by its Director of Policy, even though the consultation is officially closed. That better regulation is required is beyond doubt, but how to achieve it proportionately and cost-effectively, in a way that gives confidence to users of insolvency services and all those affected by insolvency, including the insolvency profession, is the challenge. Recognising that a single independent regulator is an unattainable ideal, my principal suggestions - and this is a personal...

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Listing in its Annexes the insolvency procedures to which the European Insolvency Regulation applies should assist in bringing certainty to the application and use of the Regulation. But can we really be certain? Take the Sauvegarde Financière Accélérée in France, which is not listed in any annexe at the time of writing. It is a separate procedure from Sauvegarde (which is listed). Moreover, Sauvegarde is not an insolvency procedure in France, but is recognised there as a pre-insolvency mechanism. Does it therefore constitute a collective insolvency proceeding (because if not,...

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Directors appointing administrators under paragraph 22(2), Schedule B1, Insolvency Act 1986 must give notice of intention to appoint to the company (pursuant to paragraph 26(2), Schedule B1, Insolvency Act 1986 and Rule 2.20(2)(d), Insolvency Rules 1986). The "record of the decision of the directors" to make the appointment required by Rule 2.22 must be of a valid board resolution in compliance with the requirements of the company's articles at a meeting properly convened with notice. So found Sir Andrew Morritt (Chancellor) in Minmar (929) Ltd & Teejinder Paul Chohan v Freddy Khalatschi & Martin John [2011] EWHC 1159(Ch), holding the appointment of administrators in that...

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HMRC recently issued statistics for the Business Payment Support Service for the three months ended March 2011, their headlines, as you would expect, are the level of support they have provided to date and the reducing level of applications received since the scheme was introduced at the end of 2008. A closer investigation of the statistics highlights an ever increasing level of applications being refused. During 2009 approximately 240,000 applications were received of which only 2.7% were declined. In 2010 the figures were 139,000 and 6.0% respectively, whilst the figures for the three months to March 2011 are 33,000 and 10.1%. Perhaps the most worrying statistics are revealed when one compares...

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The balance sheet test for insolvency (section 123(2), Insolvency Act 1986), first addressed by the High Court in August 2010, has been revisited on appeal. The first instance conclusion that each case should be decided on its legal (rather than accounting) merits has been strongly reinforced by the Court of Appeal in BNY Corporate Trustee Services Ltd v Eurosail - UK 2007 - 3bl Plc & Ors [2011] EWCA Civ 227. The Master of the Rolls (Lord Neuberger) noted in his leading judgment that: "I do not consider that the question whether section 123(2) applies simply turns on the question whether the liabilities of a company ...

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The latest GDP figures released this morning by the Office of National Statistics show a contraction of the UK's economy for the last quarter of 2010 by 0.5%.This is despite forecasters expecting growth of between 0.2%-0.6%. More than three years after the collapse of Lehman Brothers and the demise of Northern Rock could the UK be about to enter the previously much predicted 'double dip' recession?   With many businesses stretched to the limit and relying on a strong Christmas to improve cashflow, the contraction of the ecomony may be one more nail in the recovery's...

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