GLOSSARY
Liquidation definition
What does Liquidation mean?
Also known as Winding-up. This is the process which leads to the bringing of a company's affairs to an end. The assets are realised and distributed to creditors.
Insolvency
The process by which a company's assets are realised for the benefit of its creditors.
A liquidation may be compulsory, in which case it is initiated by an order of the court, or it may be voluntary, in which case it is instigated by the company itself. There are several powers which are only available in a compulsory winding up.
View the related practice notes about Liquidation
Corporate insolvency for dispute resolution practitioners: compulsory liquidation
This Practice Note contains a summary of the key points relating to compulsory liquidation from the perspective of a dispute resolution practitioner.Coronavirus (COVID-19)This content is affected by temporary changes introduced by the Corporate Insolvency and Governance Act 2020 and the Commercial Rent (Coronavirus) Act 2022. The Commercial Rent (Coronavirus) Act 2022 came into force on 24 March 2022. No winding-up petition may be presented in respect of ‘protected rent debt’ during the ‘moratorium period’. This is broadly from 24 March 2022 until:•24 September 2022, or •where the rent arbitration process is invoked, the conclusion of the arbitrationFor further information, see Practice Notes: Corporate Insolvency and Governance Act 2022—winding-up petitions from 1 October 2021 to 31 March 2022 [Archived] and Rent arrears recovery under the Commercial Rent (Coronavirus) Act 2022.What is compulsory liquidation?Compulsory liquidation is the process of winding up a company by the court, as distinct from a voluntary liquidation (both creditors’ voluntary liquidation (insolvent) and members’ voluntary liquidation (solvent)) which is commenced by a shareholders’ resolution.Compulsory liquidation is most frequently used by a company’s creditors, but it is also possible for others to wind companies up, such as the company itself or its members.For further reading on compulsory liquidation generally, see Practice Note:
Voluntary liquidation
Coronavirus (COVID-19): the coronavirus pandemic has caused the UK to expedite new insolvency provisions, both of a temporary and permanent nature. These are contained in the Corporate Insolvency and Governance Act 2020, which received Royal Assent on 25 June 2020. Amongst other things, the Act introduces temporary prohibitions on issuing winding up petitions. See: Coronavirus (COVID-19)—implications for property [Archived] — Property Insolvency and Assessing the impact of the Corporate Insolvency & Governance Bill on property.GeneralLiquidation (sometimes called winding up) is the process by which a company and its affairs are brought to an end and its assets distributed to its creditors and members as stated by law. It is governed by:•the Insolvency Act 1986 (IA 1986)•the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024Liquidation of companies incorporated in England and Wales is subject to the jurisdiction of:•the Chancery Division of the High Court, or•where the company has a paid-up share capital not exceeding £120,000, designated county courtsLiquidation is carried out by:•the Official Receiver, or•a liquidator, who must be a qualified insolvency practitioner. In this case, the company must have enough assets to pay the liquidator's feesLiquidation may
Compulsory liquidation
Coronavirus (COVID-19): the coronavirus pandemic has caused the UK to expedite new insolvency provisions, both of a temporary and permanent nature. These are contained in the Corporate Insolvency and Governance Act 2020, which received Royal Assent on 25 June 2020. Amongst other things, the Act introduces temporary prohibitions on issuing winding up petitions. See: Coronavirus (COVID-19)—implications for property [Archived] — Property Insolvency and Assessing the impact of the Corporate Insolvency & Governance Bill on property.GeneralLiquidation (sometimes called winding up) is the process by which a company and its affairs are brought to an end and its assets distributed to creditors and members as prescribed by law. It is governed by: •the Insolvency Act 1986 (IA 1986)•the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024Liquidation of companies incorporated in England and Wales is subject to the jurisdiction of:•the Chancery Division of the High Court, or•where the company has a paid-up share capital not exceeding £120,000, designated county courtsLiquidation is supervised by:•the Official Receiver, or•a liquidator, who must be a qualified insolvency practitioner. In this case the company must have enough assets to pay the liquidator's feesLiquidation may be:
Overseas companies in the UK—winding up, liquidation, insolvency and closure
When an overseas company opens an establishment which carries on business in the United Kingdom, it may have to register its particulars with Companies House. For details on registration requirements, see Practice Note: Registration of overseas companies in the UK.This Practice Note summarises the requirements of an overseas company pursuant to the Companies Act 2006 (CA 2006) and the Overseas Companies Regulations 2009 (OC Regs 2009) in relation to its winding up, liquidation or other insolvency proceedings and the closure of its UK establishment.This Practice Note should be read in conjunction with Practice Notes: Overseas companies in the UK—alteration of registered particulars, accounts and charges and Overseas companies registered in the UK—trading disclosures and execution.Winding upWhere an overseas company with one or more UK establishments is being wound up, it must deliver a return to Companies House on a form OS LQ03 containing the following details:•the company's name•whether the company is being wound up by an order of a court and, if so, the name and address of the court and the date of the order•if the company is not being wound up by an order of the court, details of the action by which the company is being wound up•whether the winding up has been instigated by:◦the company's members
Compulsory liquidation of a Limited Liability Partnership
This Practice Note explains how a Limited Liability Partnership (LLP) can be placed into compulsory liquidation, what powers the liquidator has, and what the obligations of members are. This Practice Note does not apply to Limited Partnerships, for which see Practice Note: Limited partnerships and insolvency—key principles.Coronavirus (COVID-19) and the Corporate Insolvency and Governance Act 2020This content is affected by the coronavirus (COVID-19) pandemic and the Corporate Insolvency and Governance Act 2020 (CIGA 2020), including temporary changes to winding-up petitions and the wrongful trading regime. For further details on the impact of coronavirus on restructuring and insolvency, see our Coronavirus (COVID-19) toolkit and for related news, guidance and other resources to assist practitioners working on restructuring and insolvency matters, see: Coronavirus (COVID-19)—Restructuring & Insolvency—overview.Legislation was introduced to temporarily prevent winding-up proceedings being made on the basis of unsatisfied statutory demands and to temporarily stop winding-up proceedings where coronavirus has had a financial effect on the company. These provisions expired on 30 September 2021. For more information, see Practice Note: Corporate Insolvency and Governance Act 2020—temporary changes to corporate statutory demands and winding-up petitions [Archived]. From 1 October 2021, a new regime is introduced in relation to winding-up petitions—see Practice Note: Corporate Insolvency and Governance Act 2022—winding-up petitions from 1 October 2021 to 31 March 2022 [Archived].Applicable legislationThe Limited
Creditors’ voluntary liquidation of a Limited Liability Partnership
This note explains how a Limited Liability Partnership (LLP) can be placed into creditors’ voluntary liquidation (CVL), what powers the liquidator has, and what the obligations of members are. This Practice Note does not apply to Limited Partnerships, for which, see Practice Note: Limited partnerships and insolvency—key principles.Applicable legislationThe Limited Liability Partnerships Act 2000 (LLPA 2000) introduced LLPs and must be read in conjunction with the Limited Liability Partnerships Regulations 2001 (LLPR 2001), SI 2001/1090. The LLPR 2001 apply the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016, SI 2016/1024, to LLPs.The IA 1986 only applies to LLPs registered in Great Britain.The LLPR 2001 explain how the IA 1986 and IR 2016 apply to LLPs and clarify the following matters:•references to a company shall include references to an LLP•references to a director/officer shall include references to a member of an LLP•references to the articles of association of the company shall include references to the limited liability partnership agreement of an LLPThe modifications set out in LLPR 2001, Sch 3 apply to the IA 1986. As LLPR 2001, reg 5 explains how words in the IA 1986, are to be interpreted when applied to an LLP (see above SI 2001/1090, reg 5), LLPR 2001, Sch 3 does not seek to
Real estate—United Kingdom - England & Wales—Q&A guide
Real estate—United Kingdom - England & Wales—Q&A guide This Practice Note contains a jurisdiction-specific Q&A guide to real estate in United Kingdom - England & Wales published as part of the Lexology Getting the Deal Through series by Law Business Research (published: January 2022). Authors: Fried Frank Harris Shriver & Jacobson LLP—Patrick Williams; Jons F. Lehmann; Devina Rana 1. How would you explain your jurisdiction’s legal system to an investor? England and Wales have a common law legal system. Investing in England and Wales is highly favoured given its system of compulsory land registration and just legal system. The laws governing real estate are predominantly statute based, and these are constantly developed through case law. International law is relevant to a limited extent (eg, matters concerning merger control are dealt with by international treaties that the United Kingdom is a part of). It is unclear how Brexit will impact this. In England and Wales, land contracts need to be in writing, to incorporate all relevant terms of sale, and to be signed by both seller and buyer. Oral contracts for the sale of land are usually unenforceable. Contracts for land are 'exchanged', with the legal transfer of ownership taking place on completion of either a deed of transfer or grant of a lease. 2. Does your jurisdiction have a system for registration or recording of ownership, leasehold and security interests in real
Workers and Temporary Workers sponsor duties: sponsor changes of circumstances
Workers and Temporary Workers sponsor duties: sponsor changes of circumstances Sponsor organisations are required to report various changes of circumstances affecting their organisation to the Home Office. How to submit the report and who should do it differs according to the nature of the change. See Practice Note: Downgrading and revocation of Workers and Temporary Workers sponsorship licences for more details on the sanctions that a sponsor can receive for non-compliance with these reporting duties. Changes that must be notified on the Sponsorship Management System The following changes should be reported by the Level 1 user on the 'request change of circumstances' function on the Sponsorship Management System (SMS). A Level 2 user cannot do this. All of the listed changes bar two must be reported within 20-working days of the relevant circumstance occurring. The Sponsor Guidance states that the Home Office may follow up with a request for evidence of the change. Where a change is reported on the SMS and this is relevant, the request will come on a submission sheet. Documents that will be requested can include, but are not limited to, documents that would have been mandatory to submit at the time of the initial application. It is advisable to pre-empt any request where possible by preparing relevant copy evidence for submission at the same time as, or soon after the change is reported
The community right to bid and assets of community value—what is the community right to bid, what are assets of community value and how are they nominated?
The community right to bid and assets of community value—what is the community right to bid, what are assets of community value and how are they nominated? What is the community right to bid? The community right to bid was introduced by sections 87–108 of the Localism Act 2011 (LA 2011) to enable local community groups to nominate buildings or land for listing by the local authority as assets of community value. When buildings or land listed as assets of community value come up for sale or change ownership, a moratorium on the sale of up to six months can be invoked, providing local community groups with an opportunity to bid to buy the asset on the open market. Importantly, there is no right for the community to buy the asset; nor is there a right of first refusal on a sale. Instead, the community is simply entitled to bid for the asset (and is given time, during the moratorium, to prepare a proposal for the asset). The owner of the asset can chose freely who to sell the asset to and for how much. Although the provisions in LA 2011 relating to the community right to bid apply in principle to England and Wales, the Welsh government is yet to introduce the required commencement order to bring into force the relevant provisions of LA 2011 in
Cloud computing—Netherlands—Q&A guide [Archived, 2020 edition]
Cloud computing—Netherlands—Q&A guide [Archived, 2020 edition] This Practice Note contains a jurisdiction-specific Q&A guide to cloud computing in Netherlands published as part of the Lexology Getting the Deal Through series by Law Business Research (published: September 2020). Authors: DLA Piper—Joris Willems; Khaled Dadi; Cyril Christiaans 1. What kinds of cloud computing transactions take place in your jurisdiction? A market study conducted by Smart Profile states that there has been an increase in the adoption of cloud solutions in the Dutch market from 2017 to 2019. In respect of the adoption of software-as-a-service (SaaS) technologies, the education sector in the Netherlands is the industry with the highest usage of SaaS, with ICT and utilities and health care following close behind. The take-up of SaaS solutions seems to be growing the quickest in the Dutch transport and construction industries. Office automation (eg, the use of Office365) accounts are the most common cloud application in the Netherlands. Other cloud solutions span across human resources, customer relationship management, finance, enterprise resource planning and call centre offerings. Many Dutch organisations are also opting to utilise cloud capacity in data centres. Microsoft Azure is leading the market here in public cloud offerings. Most organisations that use public cloud capacity do so through Microsoft Azure, with Amazon Web Services (AWS) following. In terms of cloud offerings, most local providers provide cloud services along with other IT and
View the related precedents about Liquidation
Growth shares term sheet
Growth shares term sheet [INSERT NAME OF COMPANY] growth SHARES This term sheet summarises a proposal to incentivise key employees of [insert name of company] (referred to below as the ‘Company’) by allowing those employees to subscribe for a new class of shares in the Company (Growth Shares). All issues raised in this document are for discussion purposes and each should be considered carefully before implementation. 1 Overview Under the terms of the proposal, participants will subscribe directly for Growth Shares. The Growth Shares will have rights which are designed to allow employees to participate only in post-acquisition increases in the value of the Company in the event of an IPO or liquidation, or where more than [Insert percentage]% of the Company's ordinary shares are sold (in each case, referred to in this note as an ‘Exit’). When an Exit occurs, the Growth Shares will carry an entitlement to share in part of the Exit consideration, provided that the purchase price paid to shareholders of the Company is greater than a pre-determined threshold amount (the Threshold Price). The holders of Growth Shares will receive only a pro rata portion of the consideration above this Threshold Price, sharing it with the Company's other shareholders. Growth Shares will be non-transferrable except in the event that an Exit occurs, and they will carry no entitlement to dividends. As a result of the limited
Deed of covenant: for a ship mortgage
Deed of covenant: for a ship mortgage This Deed is made on [insert day and month] 20[insert year] Parties 1 [insert name of Owner], a company incorporated in [England and Wales] with registered number [insert company number] whose registered office is at [insert address] (the Owner); and 2 [insert name of Mortgagee] a company incorporated in [England and Wales] with registered number [insert company number] whose registered office is at [insert address] (the Mortgagee) Background (A) The Mortgagee and the Owner have entered into a loan agreement dated [insert date] (the Loan Agreement) [a copy of which is attached to this Deed as Schedule 3] in which the Mortgagee has agreed to make a loan of [insert amount of loan] to the Owner to [re-] finance the [purchase OR construction] of the m.v. [insert name of ship] registered as a United Kingdom ship in the name of the Owner under official number [insert ship number] (the Ship). (B) To secure the performance by the Owner of its obligations under the Loan Agreement and this Deed including the payment to the Mortgagee of all principal, interest, costs and other amounts which are or may at any time in the future become due and owing to the Mortgagee from the Owner under the Loan Agreement and this Deed (the Secured Indebtedness), the Owner as beneficial owner and registered owner of sixty-four (64)
Guarantee and indemnity: single company guarantor—bilateral—all monies
Guarantee and indemnity: single company guarantor—bilateral—all monies This Deed of guarantee and indemnity is made on [insert day and month] 20[insert year] Parties 1 [Insert name of Guarantor], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address] (the Guarantor); and 2 [Insert name of Lender], of [insert address] (the Lender). BACKGROUND (A) The Lender has provided facilities to the Company (as defined below) under various financing arrangements. (B) It is a condition of the Lender making the facilities available to the Company that the Guarantor enter into this Deed in favour of the Lender. It is agreed as follows: 1 Definitions and interpretation 1.1 Definitions In this Deed[, unless otherwise provided]: Business Day • means a day, other than a Saturday, Sunday or public holiday on which banks are open for business in London; Company • means [insert name of the borrower company to whom the Lender is making financing facilities available], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address]; Legal Reservations • means: (a) the principle that the granting or not of equitable remedies is at the discretion of a court; (b) the time barring of claims under any limitation acts in any jurisdiction; and (c) any other principles of law applicable to companies generally; [Material Adverse Effect • means a material adverse effect on: (a) the
Executive service agreement
Executive service agreement This Agreement is made on [date] Parties 1 [Name of company], a company incorporated in England with registered number [number] whose registered office is at [address] (the Company); and 2 [Name of employee], of [address] (you). The parties agree: 1 Definitions and interpretation 1.1 In this Agreement the following expressions will, unless the context otherwise requires, have the meanings set opposite them: Basic Salary • the meaning given to it in Clause 8.1; [Board • [the directors of the Company present at a meeting (i) of directors of the Company or (ii) of a duly appointed committee of directors of the Company[, such meeting to be convened and quorate in accordance with the articles of association of the Company and the Companies Act 2006] OR the directors of the Company present at a meeting of directors of the Company[, such meeting to be convened and quorate in accordance with the articles of association of the Company and the Companies Act 2006] ];] [Chief Executive • the [chief executive] of [the Company OR [insert name of Group Company]] as appointed by the [Board OR Group Board] from time to time;] Commencement Date • [[date] OR the date specified in Clause 3.1] (notwithstanding the date of execution of this Agreement); Competing Business • the meaning given to it in Clause 27.6; Confidential Information • the meaning given to it in Clause 18.1; [Control • the meaning set out in section 995 of
Return of capital provisions—articles—private equity or venture capital
Return of capital provisions—articles—private equity or venture capital Insert the following as new definitions (if not already included) in the articles of association of the relevant company: A Ordinary Shares • means the A ordinary shares of [insert amount]p each in the capital of the Company; Available Profits • means profits available for distribution within the meaning of the Companies Act; B Ordinary Shares • means the B ordinary shares of [insert amount]p each in the capital of the Company; Issue Price • means the price at which the relevant Share is issued, being the aggregate of the amount paid up or credited as paid up in respect of the nominal value thereof and any share premium thereon; Preference Dividend • means the dividend payable pursuant to Article [insert number of article dealing with company dividend payments]; Preference Shares • means the cumulative redeemable preference shares of [insert amount]p each in the capital of the Company; Sale • means the sale of the whole of the issued equity share capital of the Company to a single buyer or to one or more buyers as part of a single transaction; Insert the following as a new
Guarantee and indemnity of seller’s obligations (asset purchase)
Guarantee and indemnity of seller’s obligations (asset purchase) This Deed is made on [insert day and month] 20[insert year] Parties 1 [insert name of guarantor entity] [of OR a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at] [insert address] (the Guarantor); and 2 [insert name of the buyer] [of OR a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at] [insert address] (the Buyer). BACKGROUND: (A) The Buyer has agreed to purchase the Business as a going concern pursuant to the terms of the APA. (B) The Guarantor has agreed to guarantee the performance by the Seller of its obligations and liabilities under the APA and provide the Buyer with an indemnity in respect of such obligations of the Seller. The parties agree: 1 Definitions and interpretation 1.1 In this Deed, unless otherwise provided: APA • means the asset purchase agreement between the Buyer and the Seller made on or about the date hereof with respect to the sale and purchase of the Business as a going concern, together with certain assets, properties and rights of the Business, as described in the APA; Business • means the business of [insert description of the business being bought] operated by the Seller; Business Day • means a day, other than a Saturday, Sunday or public holiday on which clearing banks generally are open
Option agreement—share subscription
Option agreement—share subscription This Agreement is made on [insert date] Parties 1 [Name of issuing company], incorporated in England and Wales under number [company number] whose registered office is at [address], brief particulars of which are set out in Schedule 1 (Company), 2 The several persons whose names and addresses are set out in Schedule 2 (together, Shareholders), 3 [Name of Optionholder] [incorporated in England and Wales under number [company number] whose registered office is at/of [address]] (Optionholder) (each being a Party and together the Parties). BACKGROUND (A) The Company is a private company limited by shares. (B) [The Optionholder has agreed to extend loan facilities to [the Company] upon and subject to the terms and conditions of the [loan agreement between the Company and the Optionholder OR loan note instrument] dated [[insert date] OR the same date as this Agreement].] (C) The Company has agreed to grant to the Optionholder an option to subscribe for new shares in the capital of the Company on the terms and conditions set out in this Agreement. The parties agree: 1 Definitions and interpretation 1.1 In this Agreement, unless the context otherwise requires the following expressions shall have the following meanings: Business Day • means a day, other than a Saturday, Sunday or public holiday, on which clearing banks are open for non-automated commercial business in the City of London; [Group • means the Company and each of its subsidiaries
Articles of association—joint venture company—corporate real estate—deadlock (50:50)
Articles of association—joint venture company—corporate real estate—deadlock (50:50) Private Company Limited By Shares Articles of Association of [Insert name of company] Limited (Incorporated in England and Wales under registered no. [insert number]) (Adopted by Special Resolution passed on [insert date] 20[insert year]) 1 Model Articles 1.1 The Model Articles shall apply to the Company, except insofar as they are modified or excluded by these Articles or are inconsistent with these Articles, and, subject to any such modifications, exclusions or inconsistencies, shall together with these Articles constitute the articles of association of the Company to the exclusion of any other articles or regulations set out in any statute or in any statutory instrument or other subordinate legislation. 1.2 The whole of Model Articles 6(2) (committees), 7 (directors to take decisions collectively), 8 (unanimous decisions), 9(3) and 9(4) (calling a directors’ meeting), 11(2) and 11(3) (quorum for directors’ meetings), 12 (chairing of directors’ meetings), 13 (casting vote), 14(1–5) (conflicts of interest), 16 (directors’ discretion to make further rules), 17 (methods of appointing directors), 22 (powers to issue different classes of shares), 26(5) (share transfers), 27–29 (transmission of shares), 36 (authority to capitalise and appropriation of capitalised sums), 39 (chairing meetings), 44(2) (voting), 43 (errors and disputes), 50 (no right to inspect accounts and other records), 51 (provision for employees), 52 (indemnity) and 53 (insurance) shall not apply to the Company. 2 Definitions and Interpretation
Recognising crime—red flags and warning signs for staff—law firms
Recognising crime—red flags and warning signs for staff—law firms You must remain alert to the red flags and warning signs of crime potentially taking place in our organisation. While you do not have to behave like a police officer, you must make the sort of enquiries that a reasonable person (with the same qualifications, knowledge and experience as you) would make. This awareness tool identifies typical red flags and warning signs that may indicate that our firm is involved in or is itself being used to commit crime (eg money laundering, terrorist financing, bribery, corruption, property or mortgage fraud or organised crime). These factors do not automatically mean that crime is taking place, but you should be aware of them and pay particular attention to matters where a number of factors are present. These red flags and warning signs would normally require further investigation. Methods for committing crime change all the time. We have set out below typical general red flags and warning signs, broken down into three categories: (1) the client, (2) the money, (3) the transaction and then signs to look out for in specific areas of work. The lists are not exhaustive. 1 The client Red flags and warning signs in relation to the client include where the client: —is excessively obstructive or secretive; —is a politically exposed person (PEP); —uses an intermediary, or does not appear to be
Corporate Insolvency and Governance Act 2020—explanatory statement for a restructuring plan
Corporate Insolvency and Governance Act 2020—explanatory statement for a restructuring plan This document is important and requires your immediate attention If you are in any doubt as to any aspect of this proposal or as to the action you should take, you should consult your professional adviser without delay. Further copies of this document and the enclosed voting forms can be obtained from the address listed on page [insert number]. [they may also be downloaded and printed from the website [insert website address]]. Proposal in relation to restructuring plan Pursuant to Part 26A of the Companies Act 2006 Between [Insert company name] And its creditors/members (as defined in the restructuring plan) The meeting[s] of creditors/members to consider the restructuring plan (the Meeting[s]'') will be held [[at insert address] OR virtually by telephone/webinar OR on [insert date] . The meeting[s] will commence at [insert time] London time. Notice of the meeting[s] is set out in Appendix 5 to this document. The action required to be taken by creditors/members is set out on page [insert number]. Whether or not creditors/members intend to be present at the meeting[s], they are requested to complete and return the [applicable] form of proxy enclosed with this document as soon as possible. If you have any questions relating to the restructuring plan please call [insert number] or contact [insert name] using the contact details set out on page
View the related q&as about Liquidation
Where TUPE 2006, SI 2006/246, reg 8(7) takes effect (and therefore regs 4 and 7 of TUPE 2006 do not apply), does ERA 1996, s 218(2) still operate to preserve an employee’s continuity of service?
Where TUPE 2006, SI 2006/246, reg 8(7) takes effect (and therefore regs 4 and 7 of TUPE 2006 do not apply), does ERA 1996, s 218(2) still operate to preserve an employee’s continuity of service? The section 218(2) of the Employment Rights Act 1996 (ERA 1996) provides that, on the transfer of a trade, business or undertaking: • an employee’s period of employment in the trade, business or undertaking at the time of the transfer counts as a period of employment with the transferee, and • the transfer does not break the continuity of the period of employment This provision is separate from the provisions set out in the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006), SI 2006/246. Ordinarily, employees who transfer to the transferee will not need to rely on ERA 1996, s 218(2) in order to establish that their continuity of employment is preserved. However, there may be cases where an employee becomes employed by the transferee but does not automatically transfer to the transferee under TUPE 2006, such as: • because they are not assigned to the undertaking or part
When a company is in liquidation, do the directors or members retain control of the assets to the extent that they can assign them without the involvement of the insolvency practitioner appointed?
When a company is in liquidation, do the directors or members retain control of the assets to the extent that they can assign them without the involvement of the insolvency practitioner appointed? In answering this Q&A, we have referred to creditors’ voluntary winding up only. A liquidator is the officer appointed when a company goes into liquidation who has responsibility for collecting in all of the assets of the company and settling all claims against the company before putting it into dissolution (section 143 of the Insolvency Act 1986). The directors’ powers cease upon the appointment of a liquidator, unless the liquidator (in a members’ voluntary liquidation) or the liquidation committee or creditors (in a creditors voluntary liquidation) sanction their continuance. The insolvency
Is it possible to take a statutory declaration by Skype video or similar technology?
Is it possible to take a statutory declaration by Skype video or similar technology? Statutory declarations are a necessary part of insolvency proceedings, most commonly where a company enters members’ voluntary liquidation (MVL) (see section 89 of the Insolvency Act 1986 (IA 1986)) and where a company enters administration (see the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, r 3.17). Section 20 of the Statutory Declarations Act 1835 (SDA 1835) prescribes the form of the statutory declaration to be given is as set out in the SDA 1835, Sch. Although this gives the form of words to be used, it makes no other prescription as to the formal requirements to be followed. The practice in this area is, therefore, largely customary. Custom dictates that the person giving the statutory declaration and the solicitor administering in it are in the same place, typically the solicitor’s office. Prior to 25 March 2020, the Law Society website displayed a guidance in response to a question asking, ‘Can a statutory declaration be taken by Skype?’. That guidance suggested that there was nothing in the case law or legislation which prevented the use of such technology but noted that customarily the declarant and the solicitor administering the statutory declaration would be physically proximate. This guidance was removed on 25 March 2020 although future guidance is anticipated. In an insolvency context,
When sending a notice to creditors of an insolvent company of the re-use of a prohibited name under Rule 22.4 of the Insolvency Rules 2016, where multiple names which the insolvent company traded under wished to be used, should individual notices be sent out for each name that they wish to use? Or is one sufficient for all names?
When sending a notice to creditors of an insolvent company of the re-use of a prohibited name under Rule 22.4 of the Insolvency Rules 2016, where multiple names which the insolvent company traded under wished to be used, should individual notices be sent out for each name that they wish to use? Or is one sufficient for all names? The prohibited names provisions are aimed at preventing phoenix companies from causing a disadvantage to creditors by creating more transparency surrounding the re-use of company names in these situations. Breach of these provisions can lead to severe penalties, both civil and criminal. Section 216(3) of the Insolvency Act 1986 (IA 1986) and Rule 22.4–22.5 of the Insolvency Rules 2016, SI 2016/1024 contain exceptions allowing a director to use a prohibited name in certain situations. SI 2016/1024, r 22.4 provides: ‘(2) The person will not be taken to have contravened section 216 if prior to that person acting in the circumstances set out in paragraph (1) a notice is, in accordance with the requirements of paragraph (3),— (a) given by the person, to every creditor of the insolvent company whose name and address— (i) is known by that person, or (ii) is ascertainable by that person on the
Where a liquidator sells a property subject to a fixed charge and a floating charge, and there is a surplus following payment of the secured creditor's fixed charge debt, is the liquidator’s fee treated as having been drawn against floating charge realisations?
Where a liquidator sells a property subject to a fixed charge and a floating charge, and there is a surplus following payment of the secured creditor's fixed charge debt, is the liquidator’s fee treated as having been drawn against floating charge realisations? The order of priority (or waterfall of payments) in a liquidation are governed by the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024. Realisations from property subject to a fixed charge as created (ie not a crystallised floating charge) will be paid to the fixed charge holder, less the
There is a retention of title clause incorporated into a contract between a buyer and seller for the supply of goods. The buyer is now in liquidation. The buyer was previously making payment by installments and these part payments comprise approximately 50 per cent of the total sum due under the contract. If the liquidator returns the goods to the seller, does the seller need to refund the sum of the part payments to the buyer? Is the buyer entitled to reimbursement of the sums paid and, if so, what is the process?
There is a retention of title clause incorporated into a contract between a buyer and seller for the supply of goods. The buyer is now in liquidation. The buyer was previously making payment by installments and these part payments comprise approximately 50 per cent of the total sum due under the contract. If the liquidator returns the goods to the seller, does the seller need to refund the sum of the part payments to the buyer? Is the buyer entitled to reimbursement of the sums paid and, if so, what is the process? A retention of title (ROT) clause is a provision in a contract which allows the seller to retain title to goods which it has delivered to a buyer until the buyer has paid for them in full or, where permitted to do so, sold them on to a third party (see Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd). A retention of title clause is sometimes referred to as a reservation of title clause, ROT clause or Romalpa clause, after the case bearing that name. Its purpose is to protect the unpaid seller against the buyer’s insolvency, giving it priority over other creditors in respect of the goods concerned. ROT clauses can be simple where the seller retains title to the goods until the buyer pays the price of the goods,
Where a person (P) makes a statutory declaration by video conference, is it permissible for the solicitor administering the declaration to be connected to the solicitor advising P? In particular, can the solicitors live in the same house?
Where a person (P) makes a statutory declaration by video conference, is it permissible for the solicitor administering the declaration to be connected to the solicitor advising P? In particular, can the solicitors live in the same house? This Q&A has been drafted assuming the following: • the question is asked in the light of the ongoing coronavirus (COVID-19) crisis • the statutory declaration is intended to be administered prior to 30 September 2021 • the statutory declaration is one which falls within the scope of the Statutory Declarations Act 1835 • the statutory declaration is being administered in one of the following contexts: ◦ a company entering a members’ voluntary liquidation—section 89 of the Insolvency Act 1986 ◦ a company entering administration—the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, r 3.17 Prior to the restrictions imposed by the government to tackle the spread of coronavirus, there was something of an unresolved debate concerning the question of whether a solicitor administering a statutory declaration was required to be physically present with the person giving the declaration. The social-distancing measures drew this debate into sharp focus with a significant number of practitioners seeking to use video conferencing facilities such as Zoom and Skype to administer statutory declarations. In response a Temporary Insolvency Practice Direction was introduced on 6 April 2020 which, among other things dealt with this issue. This Practice Direction expired on
Is the official receiver entitled to 15% of the ‘assets realised’ if the only asset is cash (and therefore arguably not realized in the same way another asset may need to be realized), under Schedule 1 of the Insolvency Proceedings (Fees) Order 2016, SI 2016/692 fees payable in insolvency proceedings? Is there any case law on this point?
Is the receiver'>official receiver entitled to 15% of the ‘assets realised’ if the only asset is cash (and therefore arguably not realized in the same way another asset may need to be realized), under Schedule 1 of the Insolvency Proceedings (Fees) Order 2016, SI 2016/692 fees payable in insolvency proceedings? Is there any case law on this point? The Insolvency Proceedings (Fees) Order 2016 (IP(F)O 2016), SI 2016/692 is very clear, that the official receiver is entitled to 15% of chargeable receipts realised by the official receiver in its capacity as either trustee in bankruptcy or liquidator of a company in compulsory liquidation. No further definition is given of 'chargeable receipts' other than that they are amounts paid into the
In whose name does a receiver, who is appointed over assets belonging to a company in administration, issue court proceedings against a debtor? Would it be in the name of the receiver acting as principal or as agent for the company in administration?
In whose name does a receiver, who is appointed over assets belonging to a company in administration, issue court proceedings against a debtor? Would it be in the name of the receiver acting as principal or as agent for the company in administration? Position of receiver A receiver generally acts as agent of the company (ie the mortgagor) in exercising its powers under the security document such as collecting income from and disposing of the assets in respect of which the receiver has been appointed. This agency relationship will be terminated upon the company being wound-up—see Thomas v Todd. In such a situation, the receiver does not automatically become the agent of the mortgagee (see Gosling v Gaskell) and if the receiver continues to act, he will do so as principal (rather than as agent of the mortgagor). For the avoidance of doubt, termination of the agency relationship between the receiver and company will not in itself terminate the receiver’s appointment. We are not aware of any specific authority on the effect of the company’s administration on the agency relationship between the receiver and company. However, the position under liquidation may be a helpful analogy. Once a compulsory winding-up order has been made or a voluntary winding-up has commenced and the receiver's agency has ended, the receiver does nonetheless retain certain powers. The receiver may still continue to
In regards to the temporary measures for creditors’ petitions presented between 1 October 2021 and 31 March 2022, do these measures supersede the previous temporary measures? For example, if a debt is less than £10,000, is it possible to still present a winding-up petition if it can be shown that coronavirus (COVID-19) has not had a financial effect on the debtor company by passing the coronavirus test? Or is there another way to recover a debt of less than £10,000?
In regards to the temporary measures for creditors’ petitions presented between 1 October 2021 and 31 March 2022, do these measures supersede the previous temporary measures? For example, if a debt is less than £10,000, is it possible to still present a winding-up petition if it can be shown that coronavirus (COVID-19) has not had a financial effect on the debtor company by passing the coronavirus test? Or is there another way to recover a debt of less than £10,000? We have assumed that the question refers to a hypothetical winding-up petition presented as at the time of writing, and not at any earlier date. We therefore do not address the position in relation to a winding-up petition heard as at the time of writing, but having been presented prior to 1 October 2021. As is well-known, the coronavirus (COVID-19) pandemic prompted the passing of legislation which placed (and continues to place) restrictions on the presentation of winding-up petitions. Those restrictions are found in Schedule 10 to the Corporate Insolvency and Governance Act 2020 (CIGA 2020). So far as is relevant, the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) (No. 2) Regulations (the Regulations), SI 2021/1091, came into force on 1 October 2021. The Regulations, SI 2021/1091 amended the text of CIGA 2020, Sch 10 by replacing it in its entirely. It ought to
View the related News about Liquidation
FTT—debt transfer notice can be issued to a former director of a managed service company (Gradidge v HMRC)
Tax analysis: In Gradidge, the First-tier Tax Tribunal (FTT) dismissed the appeal against a debt transfer notice (DTN) that had been issued to the taxpayer under section 688A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) to recover income tax and National Insurance contributions (NICs) that should have been deducted and paid to HMRC via PAYE by the managed service company (MSC) of which the taxpayer had been the sole director and shareholder.
Settlement agreement between employer and surety did not bind contractor (ML Hart Builders v Swiss Cottage)
Construction analysis: The Technology and Construction Court (TCC) found that a settlement agreement made between the employer under a construction contract and the surety under a bond provided by the contractor was not binding on the contractor, in relation to the value of the final account under the construction contract. Further, the contractor was entitled to refer the value of the final account to a second adjudicator, where a previous adjudicator had declined to carry out the valuation.
Deutsche, NatWest eye deals worth US$34m in Swiss LIBOR case
Law360: A proposed class of investors accusing various financial institutions of conspiring to manipulate the Swiss Franc LIBOR has asked a New York federal court to approve a US$21m settlement with NatWest Markets and a US$13m settlement with Deutsche Bank.
Restructuring & Insolvency weekly highlights—30 June 2022
This week's edition of Restructuring & Insolvency weekly highlights includes: the publication of a report highlighting the impact of CVAs on commercial landlords, a judgment on whether an administration had been properly extended (Re E Realisations 2020 Ltd), the first successful criminal prosecution of bounce back loan fraud, plus a round-up of other news and cases for restructuring and insolvency professionals.
Private Client weekly highlights—30 June 2022
This week’s edition of Private Client highlights includes: (1) Companies House’s blog ‘Explaining the secondary legislation for the Register of Overseas Entities—part 1; (2) Lavinia Deborah Osbourne v (1) Persons Unknown (2) Ozone Networks Inc, in which the court granted an injunction over stolen NFTs held on constructive trust; (3) Official Receiver v Obaigbena, which considered the principles governing the disqualification period for directors in insolvency proceedings; (4) Analysis of Royal Commonwealth Society for the Blind v Beasant, which concerned the construction of a legacy determined by reference to the nil rate band; (5) The Department for Work and Pensions’ call for evidence on helping pension scheme members to understand pension choices; (6) Analysis of the Bill of Rights Bill and its implications for human rights in the UK, and (7) Devall v Ministry of Justice, which concerned the systemic and operational duties owed by a public authority to the deceased pursuant to Article 2 and 8 of European Convention on Human Rights.
Dispute Resolution weekly highlights—30 June 2022
This week's edition of Dispute Resolution weekly highlights includes: analysis of a number of key DR developments and key judicial decisions including the long awaited judgment in Osbourne v Persons Unknown (are NFTs property?) as well as that of the Court of Appeal in AIG Europe SA v John Wood (anti-suit injunctions to support contractual agreements); dates for your diary; details of our most recently published content; and other information of general interest to dispute resolution practitioners.
Dilution of secured creditor rights under the Indian insolvency regime
Restructuring & Insolvency analysis: The position of secured creditors under India’s nascent Insolvency and Bankruptcy Code (2016) has been weakened due a recent order of the Supreme Court of India—India Resurgent ARC Private Ltd v Amit Metaliks (2021) (‘Supreme Court Order’). Written by Suharsh Sinha, partner at AZB & Partners, Mumbai, India.
Appeal—Directors’ disqualification, CDDA 1986—legal test for trading to the detriment of creditors—principles governing disqualification period (Official Receiver v Obaigbena)
Restructuring & Insolvency analysis: The court dismissed the director’s appeal against an order disqualifying him for a period of seven years pursuant to section 6 of the Company Directors Disqualification Act 1986 (CDDA 1986). Mr Justice Fancourt rejected the appellant’s argument that the trial judge had applied the wrong legal test in that while she found that the directors had caused the company to trade to the detriment of creditors when there was no reasonable prospect of creditors being paid or of the company avoiding insolvent liquidation, she had not made any finding that the director ought to have so concluded. Written by Tiran Nersessian, barrister at 4 Stone Buildings, Lincoln’s Inn.
Assignment of claims in insolvency and review jurisdiction-vexatious, debarred and disavowed claims (Re Emerald Properties (London) Ltd)
Restructuring & Insolvency analysis: A previous director/shareholder of a company in solvent liquidation sought a direction for the assignment from the liquidators of misfeasance claims against the other former director/shareholder; the court considered whether such were debarred by previous orders, prevented by a previous disavowal (concession) and/or were otherwise likely to be hopeless or vexatious and ought not to be allowed. The court summarised the principles to be applied when exercising its review jurisdiction under rule 12.59(1) of the Insolvency (England and Wales) Rules 2016 (overall to be exercised with caution) and permitting a party to resile from concessions (where justice requires). Written by Morwenna Macro, barrister at Five Paper.
Construction weekly highlights—23 June 2022
This week's edition of Construction weekly highlights includes a case in which the Court of Appeal held that statutory adjudication rights under the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) extended to a collateral warranty (Abbey Healthcare v Simply Construct), a case in which the Technology and Construction Court (TCC) decided that a claim for remedial work costs under a collateral warranty was not too remote (Orchard Plaza Management v Balfour Beatty Regional), a case in which the TCC declined to enforce an adjudicator’s decision in favour of a company subject to a Company Voluntary Arrangement (FTH v Varis Developments), analyses of the impacts of the Building Safety Act 2022 (BSA 2022) from an insurance and Scottish perspective, and the publication of the Government Commercial Function’s guide to the Procurement Bill.
Speed up all aspects of your legal work with tools that help you to work faster and smarter. Win cases, close deals and grow your business–all whilst saving time and reducing risk.