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This month’s highlights include a look at how insolvency practitioners (IPs) should commence or defend proceedings following the abolition of the need to obtain sanction, the latest Lehmans case, plus a round up of other interesting cases and developments.
Re Longmeade Ltd (In liquidation)  EWHC 356 (Ch),  All ER (D) 259 (Feb)
Has the removal of the need for liquidators to obtain sanction before causing a company to commence or defend legal proceedings signalled a change in the way the courts approach a liquidator’s power to bring proceedings? Faith Julian, barrister at 9 Stone Buildings, reviews the decision in Re Longmeade Ltd (in liquidation), in which liquidators sought directions in respect of commencing proceedings contrary to the wishes of creditors.
For further details, see News Analysis: Office-holders commencing claims in the sanctionless era.
Re Property Edge Lettings Ltd Saw (SW) 2010 Ltd and another v Wilson and others  EWHC 4069 (Ch),  All ER (D) 118 (Mar)
Did the grant of a floating charge result in the crystallisation of an earlier floating charge pursuant to the terms of a negative pledge? What is the impact on appointment of administrators appointed under the floating charge? Natalie Brown, barrister at Radcliffe Chambers, offers practical advice to lenders and administrators.
For further details, see News Analysis: Challenging the validity of a floating charge following an administrator appointment (Re Property Edge Lettings Ltd).
Lehman Brothers Luxembourg Investments S.à.r.l v Lehman Brothers UK Holdings Ltd (in administration)  EWHC 617 (Ch),  All ER (D) 183 (Mar)
James Goodwin, barrister at Wilberforce Chambers, assesses the practical implications of the Chancery Division ruling in the latest Lehman Brothers case concerning whether the claimant company was entitled to the relief that it claimed as a creditor of the defendant.
For further details, see News Analysis: Lehmans and subordinated loan agreements.
Changes to SIP 2 and 4 now in effect
From 6 April 2016, new legislative provisions for the reporting obligations of insolvency office holders on the conduct of those who formerly controlled a company came into effect. As a result, amendments have been made to Statement of Insolvency Practice (SIP) 2 and 4 (see LNB News 06/04/2016 101). The aim of the new reporting system is to reduce the burden on office holders to supply information and introduce efficiencies in the process. Conduct reports will be based upon information coming to light in the ordinary course of the office holder’s work.
Liquidators entitled to costs pre-dating a change of liquidator
Tackie & Anor v Morrison  EWHC 3980 (Ch)
Where there is a change of liquidator in the course of an office-holder’s claim, does the indemnity principle prevent the new liquidators from recovering costs of the claim relating to the period before their appointment? Cristín Toman of Enterprise Chambers, discusses this case.
For further details, see News Analysis: Liquidators entitled to costs pre-dating a change of liquidator.
When and how can trustees set aside ancillary relief orders?
Sands (as trustee in bankruptcy of Mr Tarlochan Singh v Singh and others  EWHC 636 (Ch),  All ER (D) 209 (Mar)
Is there any way for trustees in bankruptcy (trustees) to circumvent the Court of Appeal’s decision in Hill v Haines? John de Waal QC, barrister at Hardwicke Chambers, and Mark Sands, partner at RSM, review the judgment in Sands v Singh, in which the High Court was asked, among other things, to set aside an ancillary relief (AR) settlement entered into prior to bankruptcy as a transaction at an undervalue (TUV).
For further details, see News Analysis: When and how can trustees set aside ancillary relief orders?
New bankruptcy debtor application process and changes to office-holders reporting on the conduct of company directors from 6 April 2016
The Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016 (SI 2016/481) (updated from draft on 5 April 2016) make amendments as a result of the new procedure introduced for a debtor to apply for their own bankruptcy (ie a debtor must make an application to an adjudicator instead of petitioning the court).
From 6 April 2016, the application process for people wishing to make themselves bankrupt has moved out of the courts and gone online. The Insolvency Service has published an overview of the changes and effects.
The Regulations also make amendments in connection with the Small Business, Enterprise and Employment Act 2015, s 107, as a result of the changes to the requirements for office-holders reporting on the conduct of officers of insolvent companies.
Updated Insolvency Litigation and the Jackson Reforms report issued
The updated ‘Insolvency Litigation and the Jackson Reforms’ (ILJR) report has found that without the insolvency litigation exemption from the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPOA 2012), 51% of appointment takers say none of their cases would have gone ahead and 86% of respondents to the survey believed that less money will be returned to creditors.
Jackson sets way forward on bills of costs
In the Keynote Address at the Law Society’s Civil Litigation Conference, Lord Justice Jackson has addressed the controversy around on reforms to bills of costs. He said that the current bill format is not ‘helpful or appropriate’ for the modern legal system, and requires reform it can be ‘relatively easy for a receiving party to disguise or even hide what has gone on’. As part of his Address, Jackson LJ also set out the new format of bills which would be in place for all work from October 2017.
New specialist insolvency licences from IPA
The Insolvency Practitioners Association (IPA) is to grant licences to eligible practitioners following the changes to the insolvency licensing regime under the Deregulation Act 2015.
The future of the care home industry
Paul Zalkin, director at Quantuma, looks at the challenges when restructuring care homes. Care homes are in the news again following concerns about ageing and the growing population. He looks at the challenges of keeping the facility open and trading while a buyer is found and funding through this period.
For further details, see News Analysis: The future of the care home industry
LSREF III Wight Ltd v Gateley LLP
 All ER (D) 145 (Apr),  EWCA Civ 359
Abstract: The Court of Appeal, Civil Division, allowed the defendant solicitors' firm's appeal from an order made against the defendant for a negligent report on title which failed to draw the bank's attention to the existence and consequences of insolvency forfeiture provisions in the lease. The judge had made an error of principle in having confined his assessment of loss to the transaction date, rather than the trial date and none of the judge's reasons justified the conclusion that the claimant had not unreasonably failed to mitigate its loss. Nonetheless, the defendant was liable for the full cost which the claimant had incurred in curing a defect in a lease.
Goldtrail Travel (in Liquidation) v Aydin
 All ER (D) 91 (Apr),  EWCA Civ 371
Abstract: The Court of Appeal, Civil Division, ruled on an appeal against findings that the appellants had dishonestly assisted A (the 100% owner and sole director of the respondent company) to breach his duties to that company under CA 2006, s 175, and had dishonestly assisted A in misapplying the company's money. It dismissed the appeal (although the judge's conclusion that the appellants were liable to compensate the company for a particular sum as part of the misapplication claim, was reversed).
Okon v London Borough of Lewisham
 All ER (D) 123 (Apr),  EWHC 864 (Ch)
Abstract: The Chancery Division held that, providing the claimant gave certain undertakings, it would grant permission to appeal and allow an appeal and set aside a bankruptcy order made in respect of the claimant on the petition of a local authority. The petition had been based on council tax liability orders, which the claimant disputed. The court held that the judge ought to have adjourned the bankruptcy petition in order to await the outcome of the claimant's appeal to the Valuation Tribunal in respect of the liability orders.
Cooke v Dunbar Assets plc
 All ER (D) 49 (Apr),  EWHC 579 (Ch)
Abstract: The Chancery Division dismissed the applicant's appeal against a bankruptcy order. It held that, among other things, in making the order the deputy district judge had been right in finding that the respondent company had acted reasonably in rejecting the applicant's offer to secure the debt.
This is a shortened version of the Lexis®PSL Restructuring and Insolvency monthly highlights for April 2016 that was first published on Lexis®PSL Restructuring and Insolvency.
Find out more about how Lexis®PSL can help you and click here for a free trial of Lexis®PSL Restructuring and Insolvency.
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