Insolvency Blog -

The Chancellor said today in his Budget Speech, with reference to small businesses: "The improved time to pay scheme has helped businesses spread £5bn worth of tax payments over a timetable they can afford. Between them, these businesses employ over 1.4m people. The extra time has also helped businesses pay more of the tax owed. This double benefit has convinced me that the scheme should be extended for the whole of the next Parliament."   There's an assumption there that Labour will be in power after the general election! We'll just have to wait and see what happens if...

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"CVAs allow troubled companies to escape their full obligations", say landlords and other critics, according to Accountancy Age. Such a perspective ought not to be surprising because the whole point of a CVA is to relieve the company of obligations it cannot meet - on fair terms. The principles are that a company and its creditors are free to agree whatever they like in a CVA, provided, broadly, that 75% of those creditors who vote do in fact support the proposals and that no creditors are unfairly prejudiced. Landlords in particular should recognise that accepting a compromise on future income and...

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The Insolvency (Amendment) Rules 2010 effect a number of changes to insolvency procedure from 6 April 2010. One such change, subject to certain safeguards, is to bring administrators' pre-appointment costs into the expenses of the administration, which are payable by the administrator out of the assets under his control. But what exactly are "administrators' pre-appointment costs" - or, in the language of rule 2.33 (2A), "unpaid pre-administration costs"? John Tribe  has kindly brought to my attention the recently handed down decision of HHJ Purle QC in Johnson Machine and Tool Co Ltd & Anor [2010] EWHC 582 (Ch) (18 March 2010), which...

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The Insolvency (Amendment) Rules 2010 were published by HMSO on 11 March 2010, having been laid before Parliament on 10 March 2010. They come into force on 6 April 2010. We first reported the New Insolvency Rules (then known as the draft Insolvency (Amendment) (No. 3) Rules 2009) in November 2009 prior to final revision by the Insolvency Rules Committee and to final government approval. Key points (extracted from the official Explanatory Memorandum) are: communications passing between insolvency office-holders and those involved in the insolvency process may be by electronic means, provided there is consent between the sender and the recipient that communication may be effected in that way; ...

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"Pre-packs are not the problem; the problem is the insolvency." So said Lord Drayson, The Minister of State, Department for Business, Innovation and Skills, in a House of Lords debate on Thursday 11 March 2010. He was responding to a question, prompted by the Wind Hellas case and concern about insolvency tourism, asking what action the Government will take: "to prevent foreign companies using "pre-pack" insolvency laws to avoid debts."  Lord Drayson also said: "Independent studies by the World Bank have shown that the United Kingdom's insolvency framework is highly regarded - above above that of...

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The restructuring of Wind Hellas, a Greek telecoms company, has prompted the Sunday Times to repeat a claim by Bertrand des Pallières, of hedge fund SPQR Capital, that Britain is becoming a bankruptcy brothel. In this high profile example of aggrieved creditors misconstruing that it is the procedure involved rather than the underlying business failure that causes loss in insolvencies, jurisdiction shopping and bankruptcy tourism have been joined by a more colourful phrase! Not only was the Centre of Main Interests (COMI) of the relevant Wind Hellas company moved to England from Luxembourg (ie 1300 miles away from Greece...

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Portsmouth Football Club’s insolvency has valuable lessons for other troubled businesses. Why did this premiership club that has been established for over 112 years go bust? Putting aside the football legislation and emotional embroilment of Pompey’s fans, there were several business factors that led to Portsmouth FC becoming the first premiership club to go into administration. Overdue payments to HMRC Portsmouth failed to pay its scheduled payments as they fell due. This allowed HMRC to provide the courts with evidence that the company was technically insolvent. Not every case will result in a creditor taking action against...

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Statistics released in February 2010 have revealed that the number of compulsory liquidations, following the issue of a winding up petition, is increasing. Previous recessions have shown that, as the economy moves into recovery, the number of businesses facing corporate insolvency increases. The incidences of winding up petitions being issued are, therefore, likely to increase. A new aspect for this post recession period is that many businesses are coming to the end of their 'time to pay' arrangements with HMRC having failed to meet their payments schedule. With HMRC taking a stricter line, failure is likely to result in termination of...

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The European Court of Justice (Case Number C-444/07) has held that the German court was not entitled to make an attachment order against the German assets of MG Probud Gdynia sp. z o.o. ('MG Probud'), which was subject to Polish winding up proceedings. Polish law provides for a stay of enforcement proceedings against the assets of a company that goes into liquidation. Shortly after the Polish proceedings were opened, the local court in Saarbrücken, Germany had ordered an attachment of various bank accounts and claims in Germany on the application of the German Customs Office The Polish...

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The headlines from the statistics released last week by the Insolvency Service focus on the record increase in personal insolvencies. There has been an increase of 24.9% on the same quarter last year and 2009 as a whole is 25.9% up on the previous year. As far as corporate insolvencies are concerned there are marked differences across the different types of insolvency procedure. For liquidations there has been a 23% increase in cases on 2008 whilst the numbers for administrations, after eliminating anomolies, shows just a 1.7% increase for the year. By comparison to the changes on the same quarter last year liquidations have a 1% fall...

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