Insolvency Blog -

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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The Government’s Insolvency Service says: “We maintain the view that in the right circumstances pre-packs can be a useful tool”. This echoes our previous commentary on pre-packs noting that insolvency procedures operate in interests of creditors, and that creditors lose not because of the insolvency mechanism used, but because the company failed in the first place. At a recent R3 Breakfast Briefing to insolvency practitioners, Mike Chapman, the Head of Insolvency Practitioner Regulation at The Insolvency Service, confirmed that the Service has been tackling ignorance about the position of unsecured creditors in insolvency legislation...

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Not only is rent an administration expense, but it is payable on the terms of the lease. Having the company occupy only part of the premises on a quarter day will in most cases trigger an administration expense liability for the whole of the next quarter's rent, payable immediately. This results from the decision in Goldacre (Offices) Ltd v Nortel Networks UK Ltd [2009] EWHC 3389 (Ch) (07 December 2009), where HHJ Purle QC applied the Lundy Granite or liquidation expense principle to administrations in light of the similarlity of wording between Insolvency Rules 4.218 and 2.67. In February 2009 we postulated, following Innovate...

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Prior to the Pre Budget Report (PBR) in December, there was speculation that the Business Payments Support Service (BPSS), which provides assistance by agreeing to deferred payments for those businesses facing difficulties, was to be closed. The Pre Budget Report however confirmed the BPSS is to remain in place and more recently, there has been an announcement that the scheme is to be fully extended to partnerships. The availability of the BPSS for partnerships will be particularly helpful for larger professional partnerships where individual partners have to date been dealt with individually and by different tax offices, leading to the...

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Stitching up creditors; insolvency practitioners earning huge fees; rescuing businesses; clearing up a mess: these are examples of what insolvency means to people. You may have thoughts of your own (please comment below), but some of my observations are: Directors or debtors don’t usually cause loss to creditors on purpose, although creditors often lose and directors/debtors can certainly be at fault. Insolvency practitioners are highly trained, qualified, skilled and regulated specialists, who are paid the same as other specialist accountants and lawyers. Their fees are approved by creditors. Most troubled businesses can be rescued if good...

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How often has the cost of redundancies been the principal obstacle to restructuring a business? Few employers are aware of the financial assistance offered by the Insolvency Service’s Redundancy Payments Office ('RPO') to meet the cost of redundancies. Qualifying criteria Applicants will need to show that:  the business lacks the funds to meet the statutory redundancy payments; providing help will: save a significant number of jobs; secure the solvency of the business for the foreseeable future; the business will be able to repay the money within an agreed period of time.  Minimum information requirements  The...

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Modernisation and consolidation are the focus of The Insolvency (Amendment) (No. 3) Rules 2009, which are published in draft form by the Insolvency Service and are due to come into force on 6 April 2010. Fortunately they are accompanied by a consolidated version of the Insolvency Rules 1986 showing tracked changes introduced by the "Modernisation Draft Rules". Also useful - and readable, at only 19 pages - is the Stakeholder Commentary. There's a fair amount of detailed change for insolvency professionals to assimilate, but a few tasters from the Stakeholder Commentary are: The remuneration of office-holders may be set as a fixed amount instead...

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As you are probably aware, the HMRC Business Payment Support Service is responsible for running the Time to Pay Scheme to assist businesses with temporary cash flow difficulties. It is rumoured that the fast track service may be closed by the end of this year, although there is no suggestion that the Time To Pay scheme is due to be scrapped altogether. On speaking direct to the BPSS they have advised that their service was only a temporary line and they were unable to advise for how much longer they would remain open. If I receive any further information on...

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Under s212 of the Insolvency Act 1986, Liquidators have the power to pursue compensation from directors who breach their fiduciary duties to the Company. In the recent case of E D Games Limited [2009] EWHC 223 (Ch), the liquidators brought such a claim against the director. It resulted from his failure to submit VAT returns or pay VAT or any tax for a period of 22 months before the company went into liquidation. The liquidators claimed that the funds that should have been paid to HMRC in respect of VAT were used to fund the continued trading of the company beyond the point it...

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Chris Laughton, a restructuring and insolvency partner at Mercer & Hole in London, has succeeded to the deputy presidency of INSOL Europe, the European organisation of professionals who specialise in insolvency, bankruptcy and business reconstruction & recovery. Speaking from Stockholm at the conclusion of INSOL Europe's 2009 annual congress he said "I am delighted to take up this role at a time when restructuring and insolvency professionals are busy across Europe. Experience of cross-border advisory and formal insolvency work - and having local contacts throughout the region - is the key to effective...

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