Insolvency Blog - UK Insolvency
Balance sheet insolvency - Supreme Court definition
Date: 10th May, 2013 | Author: Chris Laughton | Comments: 0
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...
Administration Expenses and the rescue culture
Date: 22nd April, 2013 | Author: Chris Laughton | Comments: 0
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...
European and UK Insolvency Law
Date: 4th March, 2013 | Author: Chris Laughton | Comments: 0
The Supreme Court’s decision in Rubin v Eurofinance, its possible approach in the Eurosail case and a Question Time style debate on the European Commission’s proposed changes to the European Insolvency Regulation, were at the heart of a stimulating and thought provoking Insolvency Lawyers’ Association conference on 2 March 2013. Meeting old and new lawyer friends from the UK, offshore and Europe in and around the sessions at Trinity Hall, Cambridge added to the richness of the proceedings, with enquiry and debate spilling well beyond the lecture room. As a panel member alongside representatives of academia, the...
Interim orders on administration applications
Date: 11th February, 2013 | Author: Chris Laughton | Comments: 0
The recent decision in Re Bowen Travel Ltd [2012] EWHC 3405 (Ch) relied on the provisions of paras 13 (1)(d) and 13(3), Schedule B1, Insolvency Act 1986 that on hearing an administration application the court may make an interim order, which may, in particular, restrict the exercise of a power of the directors or the company and/or make provision conferring a discretion on the court or on a person qualified to act as an insolvency practitioner in relation to the company. The consequence was an order appointing insolvency practitioners as managers with all the powers of administrators and relieving the directors of their...
Business rates and retail insolvency
Date: 30th January, 2013 | Author: Henry Page | Comments: 0
Walking home from work last week I noticed a local book shop had ceased to trade and had written a note to their former customers, giving the explanation for the cessation of trade as an increase in business rates from £5,000p.a. to £15,000p.a. over a three year period. The note read: The explanation prompted me to ask the question: can local retail businesses survive continued increases in business rates or will more and more shops simply close the door? With large retailers such as Jessops, HMV and Blockbuster already hitting the headlines this year, it is...
Success Fees and ATE Premium Recovery
Date: 24th January, 2013 | Author: Chris Laughton | Comments: 0
Success fees arising from CFAs (Conditional Fee Agreements) and premiums for ATE (After the Event) insurance continue to be recoverable in insolvency litigation. The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No. 5 and Saving Provision) Order 2013 provides that CFA success fees and ATE insurance premiums cannot be recovered from the losing side in litigation generally, but proceedings brought by a liquidator, administrator, trustee in bankruptcy, company in administration or company in liquidation are exempt. This means that creditors are not forced to suffer these costs. So far, so good. But what we don’t want...
Blockbuster follows HMV into administration
Date: 17th January, 2013 | Author: Chris Laughton | Comments: 2
Rarely a customer of HMV and never of Blockbuster, do I still have insight into their administrations this week? Content is king and optical storage media have little emotional appeal. Why not get music and video from hard drives and broadband? Most TV seems to come to me via Tivo and - apart from some treasured vinyl - DAB and streaming should suffice for audio. Even the car player is hard disc based. No one should have been surprised about HMV or Blockbuster. Their markets moved and they did not. Are there more such failures to come? I'm no...
Zombie Companies are killing the economy
Date: 14th November, 2012 | Author: Chris Laughton | Comments: 0
Zombie companies – the living dead that cannot repay debt or invest to grow – are a serious drain on the economy. I wrote almost a year ago on this theme, suggesting that the Chancellor had missed a trick in failing to tighten the definition of non-performing loans so that loans to zombie companies are not counted towards banks’ capital adequacy. Other commentators have been equally (or more) outspoken. Jon Moulton is one of the more high profile proponents of the view that zombies should be allowed to fail and go through an insolvency process, enabling the assets...
New LinkedIn group for Young Insolvency Professionals London ‘YIPL’
Date: 24th October, 2012 | Author: Chris Laughton | Comments: 0
I am delighted to announce the formation of a new LinkedIn group for Young Insolvency Professionals London ‘YIPL’. Setup by Henry Page and Tom Guthrie who work within Mercer & Hole’s Restructuring & Insolvency team in London, the group has been setup to provide a forum for young insolvency professionals to share practical experiences, technical tips, seek guidance and just as importantly arrange get togethers. We feel that this ‘interactive group’ with regular informal gatherings will provide an appropriate forum for the young and ambitious insolvency professionals to meet and share...
Informal winding-up made more difficult - Part 3
Date: 18th October, 2012 | Author: Steve Smith | Comments: 0
As previously reported, the Government introduced legislation into the Corporation Tax Acts covering the practice previously contained in Extra-Statutory Concession C16 (ESC C16) which took effect on 1 March 2012. In broad terms, under the new legislation, provided certain conditions are satisfied, where total distributions do not exceed £25,000 such distributions will be treated as a capital receipt in the hands of the shareholder. However, initially it was not clear whether the share capital was to be included in the “total amount of the distributions”. HMRC have now confirmed that it should not and the threshold is to...
