Lexis®PSL Restructuring and Insolvency monthly highlights—December 2016

December 2016 highlights from the Lexis®PSL Restructuring and Insolvency team. This month’s highlights include an article discussing the latest judgment in relation to the Nortel group, and an article examining the court’s decision in Fehily v Atkinson that dealt with the question of whether an individual voluntary arrangement (IVA) was binding where there was a question over the debtor’s capacity, together with a round up of other restructuring and insolvency news and cases.

These December monthly highlights are a shortened version of the monthly highlights that first appeared on Lexis®PSL Restructuring and Insolvency. Not a subscriber? Find out more about how Lexis®PSL can help you and click here for a free trial of Lexis®PSL Restructuring and Insolvency.

Headlines (News updates & analysis)

Implementing a global settlement of disputes

Re Nortel Networks UK Ltd and other companies [2016] EWHC 2769 (Ch), [2016] All ER (D) 205 (Jun)

A seven-year wait by the creditors of the insolvent Nortel group for allocation of its assets could be nearing its end after the Companies Court’s approval of a settlement deal. Alexander Riddiford, barrister at South Square, explains the court’s decision—see blog post: Implementing a global settlement of disputes.

Judicial cooperation in insolvency proceedings

ENEFI Energiahatékonysági Nyrt v Directia Generala Regionala a Finantelor Publice Brasov (DGRFP) C-212/15, [2016] All ER (D) 110 (Nov)

How does the European Insolvency Regulation apply to cross-border insolvencies? Paul Sidle, a senior professional support lawyer at Linklaters, answers some questions on the issues that arose out of the decision in ENEFI v DGRFP—see blog post: Judicial cooperation in insolvency proceedings.

Insolvency and capacity

Fehily and another v Atkinson and another [2016] EWHC 3069 (Ch), [2016] All ER (D) 20 (Dec)

What evidence is required to be relied upon if there is an issue of capacity during the insolvency process? Richard Drinkwater, consultant at Hewlett Swanson, comments on a ruling that expert medical evidence was required and, even then, an IVA would still be binding—see blog post: Insolvency and capacity.

Bankrupt's obligation to disclose financial information

Re Ellison (A Bankrupt); Hicken (as Trustee in Bankruptcy of Ellison) v Ellison [2016] EWHC 2791 (Ch), [2016] All ER (D) 76 (Nov)

Derek Cockle, solicitor at Osmond & Osmond, assesses the practical implications of the judgment in Hicken v Ellison concerning the Chancery Division’s decision to allow a hearing to take place in the respondent’s absence in relation to the trustee in bankruptcy’s application for the committal of the respondent bankrupt for breach of financial disclosure orders—see blog post: Bankrupt’s obligation to disclose financial information.

Director disqualification in the context of VAT fraud

Secretary of State for Business, Energy and Industrial Strategy v Rosenblatt [2016] EWHC 2821 (Ch), [2016] All ER (D) 81 (Nov)

Joshua Shields, barrister at Exchange Chambers, considers the recent case of Secretary of State for Business, Energy and Industrial Strategy v Rosenblatt which dealt with the issue of director disqualification in the context of VAT fraud and examines the implications for insolvency practitioners—see blog post: Director disqualification in the context of VAT fraud.

Loan Market Association revises co-ordinating committee appointment letters

The Loan Market Association has published updated company and lender co-ordinating committee appointment letters and the accompanying guidance notes. It has also launched a rider designed for use where funds or other non-bank lenders are serving as members of the co-ordinating committee—see blog post: LMA revises co-ordinating committee appointment letters.

Committee flags defectively drafted R&I statutory instrument

The Joint Select Committee on Statutory Instruments has scrutinised a number of statutory instruments which, it considers requires the special attention of both Houses as they may have been defectively drafted. In particular, the Committee has brought into question seven elements of the Insolvency (England and Wales) Rules 2016, SI 2016/1024, together with expressing doubt as to whether the submission of online-only bankruptcy applications is intra vires—see blog post: Committee flags defectively drafted R&I statutory instruments.

Brexit's implications for restructuring and insolvency

If the UK’s reputation as a centre of excellence for restructuring and insolvency work is to be maintained, there needs to be sufficient clarity on what the legal consequences of Brexit will be, the Bar Council has concluded in a report. The Council believes that any post-Brexit arrangement should ensure the continuing application of the EUIR, the EU regulation on Insolvency Proceedings. However, if no agreement is possible it will be will be crucial to ensure clear transitional provisions for UK insolvencies which commenced before Brexit but will only conclude post-Brexit—see blog post: Brexit’s implications for restructuring and insolvency.

Proposal to amend EU Regulation on insolvency proceedings and practitioners

A report from European Parliament’s Committee on Legal Affairs assesses a proposal for a Regulation of the European Parliament and of the Council replacing the lists of insolvency proceedings and insolvency practitioners in Annexes A and B to Regulation (EU) 2015/848 on insolvency proceedings. The Commission proposal is of a purely technical nature and contains no substantive change to the regulation—see blog post: Proposal to amend EU Regulation on insolvency proceedings and practitioners.

Cases

Wood v Priestley and another [2016] EWHC 2986 (Ch), [2016] All ER (D) 04 (Dec)
Abstract:

The Chancery Division dismissed the claimant insolvency practitioner's claim for an indemnity arising out of a partnership agreement. The court held that, on the true construction of the agreement, the partners of the firm in which the claimant worked were not bound to indemnify him in respect of the costs and expenses and/or any award made regarding an allegation that he and another had been guilty of misfeasance and/or in breach of fiduciary duty.

Webb-Samann v Seagon C-454/15
Abstract:

The Court of Justice of the European Union gave a preliminary ruling, deciding that Article 8 of Directive (EC) 2008/94 should be interpreted as meaning that it did not require that, in the event of employer insolvency, money withheld from a former employee's salary converted into pension contributions, which that employer should have paid into a pension fund on behalf of that employee, be excluded from the scope of insolvency proceedings.

Re D'Eye; Thomas and another v Mariner Properties Ltd and another [2016] Lexis Citation 665, [2016] All ER (D) 85 (Dec)
Abstract:

The Bankruptcy Court allowed an application, by the trustees in bankruptcy of the second respondent (D), for a declaration that a property, which had been bought in D's father's name and had been transferred, for no consideration, to the first respondent company, of which D was a director, formed part of the bankruptcy estate and vested in them as the trustees in bankruptcy. Although legal title of the property was in D's father's name, the court held that the evidence pointed to the common intention that the property was to be owned beneficially by D and that, in reality, it was his.

Date for your diary

26–28 December 2016 and 2 January 2017

Crown courts, county courts hearing centres and the Royal Courts of Justice are closed (England and Wales only)

15 January 2017

Consultation on administration regime for financial market infrastructures ends. For further reading, see Consultation: Rules on ensuring the effective functioning of the financial market infrastructure special administration regime

Relevant Articles
Area of Interest