http://www.mercerhole.co.uk/latest-blogs/latest-blogs en chrislaughton@mercerhole.co.uk Copyright 2013 2013-05-10T14:35:08+00:00 http://www.mercerhole.co.uk/blog/article/balance-sheet-insolvency-supreme-court-definition http://www.mercerhole.co.uk/blog/article/balance-sheet-insolvency-supreme-court-definition 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 part of the balance sheet test. Three key paragraphs from Lord Walker’s judgement are: 41. Lord Neuberger MR developed [his discussion of s123(2)] at paras 47 to 49 of his judgment:… 2013-05-10T14:35:08+00:00 http://www.mercerhole.co.uk/blog/article/administration-expenses-and-the-rescue-culture http://www.mercerhole.co.uk/blog/article/administration-expenses-and-the-rescue-culture 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 to make administration the constructive process envisaged by the Enterprise Act.   2013-04-22T14:57:19+00:00 http://www.mercerhole.co.uk/blog/article/european-insolvency-regulation-uk-opt-in http://www.mercerhole.co.uk/blog/article/european-insolvency-regulation-uk-opt-in The UK government has decided to opt in to the proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No.1346/2000 on insolvency proceedings. Jo Swinson, the Insolvency Minister, noted when making the announcement that the UK government will now participate fully in negotiations on the draft text of the amended Regulation, that the proposed amendments will benefit UK businesses affected by insolvency in the EU.  The proposed amendments are broadly supported by all the member states, whilst the UK has been particularly active in working with the Commission to formulate the proposals.  They are a refinement of the existing Regulation rather than a complete rewriting and the drafting process is expected to conclude during 2013. Further… 2013-04-16T12:45:34+00:00 http://www.mercerhole.co.uk/blog/article/insol-europe-chris-laughton-to-honorary-membership http://www.mercerhole.co.uk/blog/article/insol-europe-chris-laughton-to-honorary-membership At its recent meeting in Basle, INSOL Europe's Council was unanimous in electing Chris Laughton to Honorary Membership of the association, in recognition of his meritorious service to the insolvency profession and outstanding work on behalf of the association as its president in 2010-11 and in relation to Eurofenix, the European Insolvency Regulation Case Register and communication. 2013-04-15T12:42:44+00:00 http://www.mercerhole.co.uk/blog/article/real-time-information-the-cash-flow-implications http://www.mercerhole.co.uk/blog/article/real-time-information-the-cash-flow-implications The main focus of publicity regarding HMRC’s Real Time Information (RTI) has been the administrative burden it will impose on small businesses up and down the country. Under the scheme, from 6 April 2013, all employers are required to file information with HMRC relating to payments under the PAYE system as soon as they have been made.  HMRC has provided limited short term relief by allowing those employers with less than 50 employees to delay filing the relevant information until the end of the month in which the payment is being made.  Welcome though this may be in taking some pressure off employers while they get used to the system, it is only a short term respite and does not address other key impacts of RTI. A significant impact upon many businesses struggling with their… 2013-04-05T07:50:28+00:00 http://www.mercerhole.co.uk/blog/article/european-and-uk-insolvency-law http://www.mercerhole.co.uk/blog/article/european-and-uk-insolvency-law 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 judiciary and government, I was able to explain the accountant IP’s perspective of the practicalities of cross-border insolvency proceedings subject to the European… 2013-03-04T12:12:54+00:00 http://www.mercerhole.co.uk/blog/article/interim-orders-on-administration-applications http://www.mercerhole.co.uk/blog/article/interim-orders-on-administration-applications 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 powers.  The reason for the order was, in essence, that the court was inclined to make a winding-up order (there was an extant petition), but there was an urgent… 2013-02-11T11:10:26+00:00 http://www.mercerhole.co.uk/blog/article/business-rates-and-retail-insolvency http://www.mercerhole.co.uk/blog/article/business-rates-and-retail-insolvency 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 obviously a challenging time for the highstreet. Short term focus on public revenue generation, to help cut the budget deficit, could be counter productive in the medium term if businesses are forced to close, with the subsequent… 2013-01-30T14:31:22+00:00 http://www.mercerhole.co.uk/blog/article/success-fees-and-ate-premium-recovery http://www.mercerhole.co.uk/blog/article/success-fees-and-ate-premium-recovery 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 is for the Ministry of Justice to produce a new statutory instrument in 2 years time withdrawing that exemption (which is what they have… 2013-01-24T14:10:26+00:00 http://www.mercerhole.co.uk/blog/article/Blockbuster-follows-HMV-into-administration http://www.mercerhole.co.uk/blog/article/Blockbuster-follows-HMV-into-administration 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 seer, but EE's high street closures are not a shock when one considers the saturated mobile phone market. What I think is a problem is the lack of finance available to small businesses generally in the UK. Too small to attract fresh equity and… 2013-01-17T09:03:21+00:00