STOP PRESS: From 6 April 2017, the Insolvency Rules 1986, SI 1986/1925 were revoked and replaced by the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024. The content in this Q&A may have been affected by this change. This Q&A is based on the Insolvency Rules 1986 (IR 1986), SI 1986/1925 as in force on 27 February 2017. Note that new insolvency rules (the Insolvency (England and Wales) Rule 2016 (IR 2016), SI 2016/1024) are due to come into

The first point to mention is that the identity/location of the creditor does not matter in respect of a statutory demand; the important issue is to consider is whether the courts of England and Wales have jurisdiction over the debtor. Although the bankruptcy level in respect of bankruptcy petitions is £5,000, there is no corresponding requirement that the amount demanded by a statutory demand must be of a certain or minimum amount. The requirements for the content of a statutory demand to be served on an individual are set out in the Insolvency (England and Wales) Rules 2016 (IR 2016),

This Q&A assumes that the legal costs in question are those of preparing the statutory demand, whether or not this includes the costs of advising the creditor on the service of a statutory demand and whether this is an appropriate step for recovery of the claim. It also assumes that the creditor’s demand is worth serving in light of the temporary measures currently in force to protect debtor companies on account of coronavirus (COVID-19), assuming the debtor is a company and not an individual (this response proceeds on the basis of that assumption). See section 10 of the Corporate Insolvency and Governance Act 2020 (CIGA 2020) and CIGA 2020, Sch 10, noting the definitions of ‘relevant period’ in CIGA

The process by which a creditor makes a claim against a company or person subject to an insolvency procedure is known as proving a debt. The Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 give prescriptive requirements for this process. For more information, see Practice Note: Proof of debt. The purpose of the proof of debt is to provide sufficient information to the officeholding insolvency practitioner who will be assessing the validity of the claim to enable them to make an accurate and correct decision. See also Practice Note: Rejection of proof of debt. IR 2016, SI 2016/1024, r 14.4 requires a proof of debt to include, inter alia, the name and address of the creditor,

Proving a debt is the term given in insolvency legislation for the process by which a creditor formally makes a claim for the outstanding debt to the insolvency practitioner (IP) who is the office-holder in the case concerned. This claim, once accepted by the IP, will rank for dividend should there be sufficient realisations in the insolvent estate for payment of a dividend to unsecured creditors. A creditor owed less than £1,000 is owed a small debt under the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, r 14.1. Creditors owed small debts are deemed to have proved their claim without the need to submit a formal proof of debt under IR 2016, SI 2016/1024, r 14.3. Creditors may prove their claims at any time. The more pressing question is whether a creditor can prove for its debt and rank for dividend in the insolvency process after the bar date. The bar date is not defined in the question,

There are two circumstances when a grant of Letter of Administration will be taken out. The first is where there is a will but there is either no named executor or the named executor cannot, will not or does not take out a Grant of Probate for some reason. In that event the person next entitled to take out a grant, usually a residuary legatee will apply for a grant of Letter of Administration with the Will Annexed. The order of priority where there is a will is set out in rule 20 of the Non-Contentious Probate Rules 1987 (the NCPR). Even where there is a will, however, if those with a prior right to a grant have been cleared off a creditor of the deceased can take a grant. The second is where the deceased

An insolvency process over the debtor will not, on the face of it, affect the creditor's rights against the guarantor. If the debtor does enter into an insolvency process, the creditor will have two options available to obtain a recovery of sums due, both of which can be pursued at the same time, claiming against the insolvent debtor and/or the guarantor. Claim against the insolvent debtor The creditor will be entitled to submit a proof of debt in the debtor's insolvency claiming for the

It is assumed that the charging order in question is a final charging order. Pursuant to the Insolvency (England and Wales) Rules 2016, SI 2016/1024, r 10.9(1)(f), a bankruptcy petition is to state that the debt is unsecured. However, section 269 of the Insolvency

Restructuring & Insolvency analysis: The court considered the test applicable when a creditor applies for an administration order on the basis of a debt that the company claims is disputed and/or offset by way of cross claim. The court determined that a creditor has standing to bring the application, despite the fact that the debt is disputed and/or subject to a cross claim. However, where that same debt is relied upon to demonstrate that the company is unable to pay its debts, or likely to become unable to pay its debts, then the debt must be proved on the balance of probabilities. Written by Kate Rogers, barrister at Radcliffe Chambers, London.

Crystallisation of floating charges A floating charge may Crystallize by operation of law or it may Crystallize in accordance with a contract. Crystallisation by contract can by divided into those events that entitle the lender to give notice of crystallisation and those that result in the floating charge being crystallised automatically. For more information on how floating charges may crystallise, see Practice Note: Crystallization of floating charges. Most debentures will clearly set out which events will trigger crystallisation by notice and which will trigger the automatic crystallisation provisions. For more information, see Crystallisation of floating charges — Crystallisation by contract. Why might de-crystallisation be desirable? Once a floating charge has crystallised, the key impact is that the chargor can no longer deal with the floating charge assets without the chargee's consent. In practice this will make it difficult for the chargor to run its business. From the chargee's perspective, this protects the assets from execution creditors and can have advantages in terms of the priority of the charge. For further

We have assumed that this Q&A is referring to a business-to-business transaction. Additional considerations may apply in a business-to-consumer contract. Formation of contract It is first necessary to consider whether a contract has been formed or not, and if so what its terms are. A legally binding contract must, among other things, comprise both an offer and acceptance. Practice Note: Forming enforceable contracts—offer analyses the requirements for a legally binding offer, and considers what we mean by 'offer', how to distinguish an offer from an ‘invitation to treat’, with relevant common examples, different species of offer, ie offers which are 'subject to contract', heads of terms and unilateral contracts, and how offers can be terminated. Practice Note: Forming enforceable contracts—acceptance analyses the requirement of acceptance in the context of forming enforceable contracts, including what we mean by 'acceptance', the different methods of accepting an offer (including

There are no general property rights in data. There is an exception, however, where the data is capable of attracting copyright or database right protection. The provisions of the Copyright, Designs and Patents Act 1988 (CDPA 1988) that deal with rights in copyright works apply in relation to database rights and databases as they do to copyright and copyright works, meaning that database rights are transmissible by assignment, testamentary disposition or the operation of law (Copyright and Rights in Databases Regulations 1997, SI 1997/3032, reg 23 and CDPA 1988, s 90(1)). An assignment transfers ownership of copyright or database right from one entity to another, so that the assignor is no longer the owner of it and therefore cannot use that right in the database unless the assignee grants a licence back to the assignor. An assignment of database rights: • must be in writing • must be signed by or on behalf of the assignor • may be total or partial • may include prospective rights