The gap in the insolvency legislation It is a striking gap in the drafting of the insolvency legislation that the effects of the making of a bankruptcy order on an individual voluntary arrangement (IVA) are not spelled out in the legislation. The consequences flowing from the making of the order have therefore been derived by the courts. The starting point is this: where a bankruptcy order has been made, either on a petition brought by the supervisor or a creditor bound by the IVA, the IVA comes to an end. While not spelt out by the legislation, this is implied from the fact that section 276(2) of the Insolvency Act 1986 (IA 1986) provides that any expenses properly incurred in the administration of the IVA should be a first charge on the bankrupt’s estate. The courts have picked up on this. This can be contrasted with the position where a bankruptcy petition is brought by a creditor who is not bound by the IVA.

This Practice Note discusses the effect of a creditors’ voluntary liquidation (CVL) on: • the company • the company’s officers • the company’s members • the company’s employees • legal proceedings The effect on the company From the date of the resolution to wind up, the company must cease its business activities except insofar as continuing them is required for its beneficial winding-up. It should be noted, though, that the corporate state and powers of the company remain in place until the company is dissolved, notwithstanding anything to the contrary in the company’s articles. This means that the liquidator of a company in voluntary liquidation must act in the name of the company unless Insolvency Act 1986 (IA 1986) or the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 specifically empowers them to act in their own name. The shares of a company which has entered voluntary liquidation cannot be transferred without the sanction of the liquidator and any alteration in the status of the company’s members,

A limited company that proposes to carry out a redemption of redeemable shares must comply with the provisions of the Companies Act 2006 (CA 2006). In addition to the provisions of CA 2006, there are other rules and guidelines that are relevant to a listed company or an AIM company (for further information, see our Practice Notes on public company redemptions of shares). For a discussion of the legal requirements that a company must comply with in order to issue redeemable shares, and the reasons why a company may redeem its shares, see Practice Note: Issue of redeemable shares. What is the effect of a redemption of shares? If a limited company redeems its shares: • those shares are treated as cancelled, and • the amount of the company’s issued share capital will be diminished accordingly by the nominal value of the shares redeemed It is not possible to hold redeemed shares in treasury, as it is on a share buyback: they are treated as cancelled immediately upon

A limited company may buy back shares in itself, if certain conditions set out in the Companies Act 2006 (CA 2006) are met. This is known as a share buyback or a purchase of own shares. In addition to the provisions of CA 2006, there are other rules and guidelines that are relevant to a listed company or an AIM company that is to buy back its own shares. The restrictions in CA 2006 relating to share buybacks do not apply to unlimited companies. For further information on this type of company, see Practice Note: Unlimited companies. For a summary of the process for carrying out a share buyback, see Practice Note: How to carry out a share buyback. For a consideration of the legal framework applicable to a share buyback and information on why a company may carry one out, see Practice Note: Share buybacks—the legal framework. Off-market or on-market? Only one type of share buyback is possible for a private limited company. It may only make an off-market

STOP PRESS: A significant restructuring of the UK listing regime came into effect on 29 July 2024, which included the removal of the premium and standard listing segments and the creation of a single listing category for equity shares in commercial companies. The commercial companies category is heavily disclosure-based and sits alongside other listing categories such as the shell companies, secondary listing and closed ended investment fund categories. A new UK Listing Rules sourcebook came into force to implement the changes and the previous Listing Rules sourcebook was revoked. For further information see Practice Note: Reform of the UK listing regime—fundamentals. This Practice Note reflects the listing regime as it was prior to 29 July 2024. A limited company that proposes to carry out a redemption of redeemable shares must comply with the provisions of the Companies Act 2006 (CA 2006). In addition to the provisions of CA 2006, there are other rules and guidelines that are relevant to a listed company or an AIM company. In particular,

A limited company may buy back shares in itself, if certain conditions set out in the Companies Act 2006 (CA 2006) are met. This is known as a share buyback or a purchase of own shares. In addition to the provisions of CA 2006, there are other rules and guidelines that are relevant to a listed company or an AIM company that is to buy back its own shares. In particular, a listed company must have regard to the UK Listing Rules (UKLRs) and this Practice Note particularly focuses on how they apply to a company with a listing of equity shares in the equity shares (commercial companies) category. An AIM company must have regard to the AIM Rules for Companies (AIM Rules), but these do not specifically refer to share buybacks, so AIM Regulation has confirmed that compliance by an AIM company with the UKLRs in relation to share buybacks would represent best practice in most circumstances. A listed company is also subject to provisions of the Disclosure Guidance

This Practice Note explains the effects for an unmarried father of obtaining parental responsibility for his child. When an unmarried father is granted parental responsibility for his child the main effects are as set out below: Effect Authority He becomes a 'parent' for the purposes of the adoption legislation and can therefore withhold his consent to adoption. Sections 21, 47(2) and 52(6) of the Adoption and Children Act 2002See Practice Note: Adoption—placement orders He becomes entitled to remove his child (under the age of 16) from local authority accommodation and, if he is willing and able to provide accommodation or to arrange for it to be provided for his child, may object to his child being accommodated in the first place. Sections 20(7)–20(8) of the Children Act 1989 (ChA 1989) He will automatically be a party to care proceedings. Family Procedure Rules 2010, SI 2010/2955, 12.3See Practice Note: Public law children procedure—Public Law Outline: overview and key principles He can appoint a guardian. ChA 1989, s 5(3)See Practice

Restructuring & Insolvency analysis: In claims relating to the misapplication of company money, the joint liquidators of Grosvenor Property Developers Ltd (the company) successfully applied for judgment against two respondents who were debarred from defending. This judgment clarifies the court’s approach to the effect of debarring orders, proving fabrications, the distinction between a shadow and a de facto director, and compound interest. Written by Nora Wannagat, barrister, at 9 Stone Buildings. She is instructed as junior counsel to Rory Brown (for the applicants) in this litigation.

Disclaimer under the Insolvency Act 1986 (IA 1986) by either a liquidator or a trustee in bankruptcy (trustee): • operates to determine from the date of the disclaimer the rights, interests and liabilities of the company or the bankrupt/bankrupt’s estate in respect of the property disclaimed • in the case of disclaimer in bankruptcy, discharges the trustee from any personal liability in respect of the property in question with effect from the commencement of the trustee’s appointment • does not, except so far as is necessary for the purposes of releasing the company or the bankrupt/bankrupt’s estate from any liability, affect the rights or liabilities of any other person • entitles any person suffering loss or damage because of the disclaimer to prove for that loss or damage in the winding-up or bankruptcy The following should be noted regarding the determination of the rights, interest and liabilities of the company or the bankrupt/bankrupt’s estate and the effect on third parties: • if the

What is a guarantee? A guarantee is an agreement between one person/entity (the guarantor) and another person/entity (the creditor), whereby the guarantor agrees to answer for the liability of another party (the principal). For a guarantee to be valid, it must be evidenced in writing and signed by the guarantor, or any agent empowered to do so. Why are guarantees relevant to insolvency? Guarantees are an important mechanism for a creditor to obtain comfort for any indebtedness due to it from the debtor, where there are concerns over the debtor's long term solvency. They are commonly used by: • banks who lend to companies and require guarantees from other parties such as group companies or company directors • landlords who often obtain guarantees from the tenant company's parent company or one or more directors • factoring companies Because guarantees tend to be called on when the debtor is either insolvent, or is in a distressed position, they tend to be seen in insolvency processes frequently and as such there is

Individuals may, at any one time, be employed by more than one employer, usually on a part-time basis for each company. These companies may sit in the same group or may be unconnected. Participation in numerous unapproved share option schemes is generally not problematic, therefore, this note concentrates on examining the effect of such simultaneous employments on an employee's ability to participate in HMRC statutory tax-advantaged plans, being: • enterprise management incentives (EMI) schemes • company share option plans (CSOPs) • share incentive plans (SIPs), and • save as you earn (SAYE) schemes For more general information on each of these schemes, see Practice Notes: • How EMI schemes work and key features • How CSOPs work and key features • How SAYE schemes work and key features • What is a SIP? This Practice Note examines the definitions of connected, group, qualifying subsidiaries, associated and constituent companies for each tax-advantaged share plan and then examines how multiple employments can impact the eligibility requirements of the four tax-advantaged

Dispute Resolution analysis: The claimant, a former member of parliament, sued the defendant for damage to his reputation as a result of alleged defamatory statements made. The claimant discontinued his claim before trial and sought to disapply the default position under CPR 38.6(1) that a discontinuing claimant will be liable for the successful defendant’s costs. It was necessary for Master McCloud to consider whether the court’s discretion could and should be applied. The court considered the circumstances in which the default position could be departed from and the level of conduct that would be required to justify such a departure from the usual rule. The issue of conduct which takes place after proceedings and whether this fell within the jurisdiction of the court was also considered. Written by Claire Kretzmann, associate costs lawyer at Paragon Costs Solutions.