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This month’s highlights include a discussion on the decline of BHS, Brexit, government proposals to boost the insolvency regime and more, plus a round up of other interesting cases and developments
Why has BHS recently fallen into administration? Mark Smith and Nick Moser, partners with Taylor Wessing LLP, examine the causes and effects of BHS’s recent decline. For further details, see News Analysis: The decline and fall of British Home Stores.
SI 2016/550: The remaining provisions of the Third Parties (Rights against Insurers) Act 2010 (TP(RAI)A 2010), which are not already in force, will be commenced on 1 August 2016.
R3 is recommending a 21-day moratorium, during which creditors will be prevented from taking any action to recover their debts to allow directors of struggling companies time to make considered decisions about their company’s future when facing insolvency.
For further details, see News Analysis: R3 proposals moratorium.
The Bankruptcy (Scotland) Bill (Session 2015-16) received royal assent on 28 April 2016 as the Bankruptcy (Scotland) Act 2016 (asp 21). The Bill was introduced for an Act of the Scottish Parliament to consolidate the Bankruptcy (Scotland) Act 1985, the Bankruptcy (Scotland) Act 1993, Part 1 of the Bankruptcy and Diligence etc. (Scotland) Act 2007, Part 2 of the Home Owner and Debtor Protection (Scotland) Act 2010, the Bankruptcy and Debt Advice (Scotland) Act 2014, the Protected Trust Deeds (Scotland) Regulations 2013 and related enactments.
LSREF III Wight Ltd v Gateley LLP  EWCA Civ 359,  All ER (D) 145 (Apr)
The Court of Appeal has handed down judgment in LSREF III Wight Ltd v Gateley LLP, a case which concerned a forfeiture clause in a lease and whether the claimant had unreasonably failed to mitigate its loss. John de Waal QC, barrister at Hardwicke chambers, says the case shows that judges want to achieve a fair result.
For further details, see News Analysis: Paying the forfeit—the importance of mitigating losses.
Are members’ voluntary liquidations (MVLs) a ticking time bomb? Helen Kavanagh and Charles Draper, members of the restructuring & insolvency practice of Squire Patton Boggs, consider whether the rush to take advantage of the lower level of tax available under the previous tax regime has left directors and insolvency practitioners (IPs) with a ticking time bomb.
For further details, see News Analysis: MVLs—a ticking time bomb?
Thomas and another v D’Eye and others  Lexis Citation 50,  All ER (D) 66 (May)
What are the consequences of a money transaction being void under section 284 of the Insolvency Act 1986 (IA 1986), and what relief can the court grant? Joseph Curl, barrister at 9 Stone Buildings, considers the significance of the recent decision in Thomas and another v D’Eye and others.
For further details, see News Analysis: Debtor payments leading up to the making of a bankruptcy order.
The ICAEW has announced it is to offer partial licences for insolvency practitioners. The decision follows changes to insolvency licensing regime. The ICAEW said it will begin accepting applications for partial licences on 1 July 2016. The decision follows that of the Insolvency Practitioners Association in April 2016.
For further details, see News Analysis: ICAEW to offer particular licenses to insolvency practitioners.
Proposals to raise the threshold for permission to appeal to the Court of Appeal have been set out for consultation by the Civil Procedure Rule Committee (CPRC). The proposals amendments to the Civil Procedure Rules (CPR) also include removing the automatic right of oral renewal for permission to appeal to the Court of Appeal in civil cases where it has been refused on the basis of the documents in the case. The consultation is open until 24 June 2016.
Following months of negotiations, David Cameron presented his new settlement for Britain in Europe. With the deal signed and the battle lines drawn, the campaign to decide the UK’s future in the EU has begun in earnest. As the debate rages across the nation, Lexis®Nexis has been working with industry experts to cut through the politics and assess the implications for a wide range of legal practice areas.
For further details, see News Analysis: What might Brexit mean for restructuring and insolvency lawyers?
The government is consulting on four proposals designed to improve the existing corporate insolvency regime. The intention is to enable more corporate rescues of viable businesses and ensure the insolvency regime delivers the best outcomes. One of the proposals is to create a new moratorium which will provide companies with an opportunity to consider the best approach for rescuing the business while free from enforcement and legal action by creditors. The consultation closes on 6 July 2016.
Advocate General v Dickie
2010 Scot (D) 16/9
Abstract: In sequestration proceedings in bankruptcy in which the respondent argued that sequestration should not be granted because the equity in two properties he owned was sufficient security for payment of the debt, the court held that as the respondent had only offered, not given, security, it had not been shown that there was sufficient security for payment of the debt to prevent the award of sequestration.
Shlosberg v Avonwick Holdings Ltd and others
 EWHC 1001 (Ch)
Abstract: Legal professional privilege in bankruptcy—the Chancery Division ruled that the claimant's trustees in the bankruptcy had acquired the benefit of his legal professional privilege with respect to one of three categories of documents held by the second defendant solicitors, who were also acting for the claimant's creditor (A). Both A and the claimant had been engaged in hostile litigation. In all the circumstances, no order was granted requiring the solicitors to cease acting for the trustees. However, an injunction was granted requiring the solicitors to cease acting for A.
Re The Copenhagen Reinsurance Company (UK) Ltd and another
 All ER (D) 25 (May);  EWHC 944 (Ch)
Abstract: Insurance—transfer of long-term insurance business. The Companies Court granted an order, among other things, sanctioning an insurance business transfer scheme to transfer the applicant company, The Copenhagen Reinsurance Company (UK) Ltd's entire insurance business to another company in the Enstar group.
 All ER (D) 118 (May);  EWHC 79 (Ch)
Abstract: Scheme of arrangement—the Chancery Division allowed the applicant company's application for an order convening a single meeting of its scheme creditors to consider and approve a scheme of arrangement. The court held that a single meeting was appropriate for the three groups of shares being considered by the court, and that the English jurisdiction was the appropriate location to hear the application.
Stevensdrake Ltd trading as Stevensdrake solicitors v Hunt and another
 All ER (D) 102 (May);  EWHC 1111 (Ch)
Abstract: The Chancery Division considered the effect of a Tomlin order on the recovery of a debt following the settlement of a claim. It held that, among other things, an agreement between the parties would not fail for lack of consideration, and that the doctrine of promissory estoppel was engaged and made it inequitable for the claimant solicitors' firm to pursue the defendants for the remaining balance due. In the circumstances, a further hearing would be necessary.
Re A Company
 All ER (D) 103 (May);  EWHC 1046 (Ch)
Abstract: The Companies Court dismissed the petitioners' petition for the winding up of a company where, among other things, the company had produced evidence that was, on its face, sufficient to raise a bona fide dispute regarding the receipt of three payments.
Hosking and another (as joint liquidators of Hellas Telecommunications (Luxembourg) II SCA) v Slaughter and May
 EWCA Civ 474;  All ER (D) 173 (May)
Abstract: The Court of Appeal, Civil Division, held that in respect of administrations that had commenced on or before 5 April 2010, the administrators could agree to pay the fees of the solicitors' firm both before and after the end of the administration. If the liquidators did not agree with the fees that had been paid, they could bring misfeasance proceedings against the administrators. The IA 1986 and the Insolvency Rules 1986 provided ways in which liquidators could challenge the decision of an administrator to pay legal fees, but they did not provide a means by which liquidators could require the assessment of costs paid in an earlier administration.
Gardner v Lemma Europe Insurance Company Ltd (in liquidation)
 EWCA Civ 484;  All ER (D) 175 (May)
Abstract: The Court of Appeal, Civil Division, dismissed an appeal against a judge's refusal to lift an automatic stay on proceedings being brought against the respondent, a company in liquidation. On the facts, the applicant had not established that he had a seriously arguable claim for an indemnity under his insurance policy with the respondent and, in the circumstances, the judge had not been wrong to refuse to exercise his discretion in favour of lifting the stay.
The Sherlock Holmes International Society Limited v Aidiniantz
 All ER (D) 162 (May);  EWHC 1076 (Ch)
Abstract: The Chancery Division held that whilst an individual, R, had been properly appointed as a director of the Sherlock Holmes International Society Ltd, he had ceased to be a director of the company at a specific date in circumstances where the articles of association provided for a director only to hold office until the next annual general meeting. A declaration was granted.
There have been developments on the following cases this month:
This is a shortened version of the Lexis®PSL Restructuring and Insolvency monthly highlights for May 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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