Insolvency Blog - UK Insolvency

Creditors who petition the court for the winding-up of a company or the bankruptcy of an individual as a debt-collecting remedy are not free from risk. HHJ Peter Coulson QC sets out in Jacob v Vockrodt [2007] EWHC 2403 (QB) when petitioning is an abuse of process that could involve the tort of malicious presentation of a bankruptcy petition. The key parts of the judgement on abuse of process are: Mr. Davies relied on the well-known passage in the judgment of Harman J in Re a Company [1983] BCLC 492 in which he said: "First, it is trite law that the Companies Court is...

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For those of you who are not accountants - or don't read Accountancy Age - the quotes below are from its article "Retailers protected from impact of Trident ruling" published on 10 January 2008. We reported the UK government's decision to exempt companies in administration from empty property rates in an earlier post. President of R3 Patricia Godfrey says the decision couldn’t have been better timed for retailers: ‘With the effects of the credit crunch increasingly likely to be felt in the New Year, this move will help administrators save business and jobs.’ Mercer & Hole business recovery...

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The Northern Rock crisis has prompted Alistair Darling, Chancellor of the Exchequer, to announce proposals for a special insolvency regime for banks in the UK. Following the publication of a consultation paper in October 2007, “Banking reform – protecting depositors”, and consideration of its results, the Chancellor revealed in an interview with the Financial Times, reported here on 3 January, some hints about his intentions. Details are patchy – perhaps deliberately – with the Chancellor planning to release more information to the Treasury Select Committee on Thursday 10 January. It seems that the FSA (Financial Services Authority) would have a role...

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"Retail insolvencies start the year" was one of Insolvency Blog's first posts of 2007. It's hardly surprising to see retail administrations at this time of year - over-leveraged and under-performing retailers have minimum borrowings after the Christmas sales peak and secured creditors will naturally choose that point to stop the losses. . . . constructive use of formal insolvency . . . can often add value when a business is saleable and the right restructuring team is brought in early enough. Paul's comment on the retail sector was: I think the consumer has the last word on who survives - if they wish for identikit high streets,...

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Companies in administration are to get a permanent exemption from empty property rates, Local Government Minister, John Healey, announced on 17 December. His decision on companies in administration was a consistent view put to the Department for Communities and Local Government in consultation and brings such businesses into line with those in liquidation and individuals subject to bankruptcy proceedings who already enjoy exemptions: "We are committed to the promotion of a rescue culture which provides opportunities for insolvent companies that have viable underlying businesses to be rescued wherever possible. A permanent exemption will remove any potential for decisions about whether to...

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According to the Yorkshire Post's article "6pm update: Bates free to stay at Elland Road - Yorkshire Post", Ken Bates, Mark Taylor and Shaun Harvey have been "allowed to continue to remain directors of the club after their involvement in a previous Leeds United-related liquidation left them in breach of insolvency rules". We gave the background to this story in a previous post. The detail of the recent judgment is not clear from the press report, which suggests that the judge gave retrospective leave for the three men to act as directors of the club. Does anyone have a copy...

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In a post on an academic US blog about credit and bankruptcy, Credit Slips: Corporate Bankruptcy Costs and Recoveries in the UK, John Armour points out the results of his research into whether creditor control is better concentrated in the hands of a single creditor (receivership) or creditors generally (administration). He concludes that there is no net difference as a result of two opposing factors: there are higher gross realisations in administrations - due, Armour suggests, to higher accountability to junior creditors incentivising administrators to maximise realisations; but dispersed creditor governance allows administrators to charge retail fee rates rather than...

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As revealed in Insolvency reform - Bank Law Blog, the Insolvency Service has issued a consultation paper setting out its proposals to modernise and streamline the law governing insolvency procedure. The broad aims are to bring insolvency law up to date with our current ability to communicate electronically, to move some decision-making process to insolvency practitioners and to remove some unnecessary burdens from insolvency practitioners. Replies to the consultation must be with the Insolvency Service by 10 December 2007. The document's full title is: "A consultation document on changes to the Insolvency Act 1986 and the Company Directors Disqualification Act 1986 to be made...

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Recent trade press reports Pre-pack administrations boosted by court decision - Accountancy Age and Pre-pack administration survives HMRC claim - Creditman refer to this case decided in March 2007. The trigger was a press release by R3 (the Association of Business Recovery Professionals) quoting Dr Sandra Frisby, Baker & McKenzie Lecturer in Company and Commercial Law at Nottingham University, whose recent research into pre-packs (sponsored by R3) shows a significant increase in the use of pre-packs since the Enterprise Act 2002. The judge rejected a claim by HMRC against the sale of DKLL Solicitors when DKLL made an application to the court...

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The credit crunch of August-September 2007 has disturbed the economic equilibrium - and may continue for a while yet. Debates about illiquidity or insolvency abound, but are we really facing a swing from boom to bust? The underlying UK economy is strong, but we now have corporate transactions stalling through lack of funding, hedge fund failures, a sub-prime lender in administration and the Northern Rock bailout. What many considered a strange US phenomenon (had many people heard of sub-prime before this summer?) has become a real domestic issue. No wonder business and consumer sentiment is...

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