There have been a string of high-profile celebrity bankruptcies over the decades, and most recently, Katie Price. A common theme among these celebrities, many of whom were former contestants on the ITV hit show “I’m a Celebrity,” is that they were bankrupted by HMRC for unpaid taxes.
On 13thFebruary 2024, the Insolvency Service (IS) released their latest monthly enforcement stats in relation to the directors’ disqualifications. The figures, whilst not surprising highlight some interesting points to note:
It is five years since the tragic Grenfell disaster but defective cladding/dangerous living conditions and fire safety are still very much hot news. But, you may be asking, why is this relevant to insolvency practitioners?
As winter draws near, the days grow shorter, temperatures dip, and businesses will be turning on the lights longer and the heating up higher; all leading to higher energy bills. But, with continuing volatility in the energy market, how many businesses can afford to do so and will energy bills sound their death knell?
Creditors can often confuse (i) the outlawed practice of “phoenixing” with (ii) pre-pack administrations. The former is an abuse of the privilege of limited liability through (often repeatedly) liquidating a company laden with debts only to emerge shortly after under the guise of a new limited company, debt free, effectively carrying on the exact same business with the same name, premises and people.
Section 284 of the Insolvency Act 1986 (the “IA86”) deals with the restrictions on a bankrupt in dealing with their property in the period between the making (practically speaking, the presentation) of a bankruptcy application and the vesting of the estate in the trustee. This period is defined as the “Relevant Period”. If a bankruptcy order is made, any disposition of property in the Relevant Period is automatically void. Any person in receipt of disposed property is treated as holding it on trust for the benefit of the bankrupt’s estate.
…there is nothing to say that directors who genuinely believe that the clouds will roll away and the sunshine of prosperity will shine upon them again and disperse the fog of their depression are not entitled to incur credit to help them to get over the bad time”
The words of Buckley J, Re White & Osmond (Parkstone) Ltd (unreported)
For those of you hoping this article would be about chess or the wonderful Netflix drama of the same name, you will be sadly disappointed. If you came here for insolvency news then keep reading. This article will focus on Her Majesty’s Revenue and Custom’s (HMRC’s) “gambit” to gain an advantage over other creditors through the return of the “crown preference” from 1 December 2020. This article explores what HMRC’s status as a secondary preferential creditor means and its implications for insolvency practitioners and others going forward.
Third parties are often caught (innocently or not) in the cross hairs of office holders seeking information and/or documents on the asset and liability position of a company in order to fulfil their functions properly and their duties to the creditors.
The recent case of The Official Receiver v Andrew Nathaniel Skeene and Junie Conrad Omari Bowers [2020] EWHC 1252 (Ch) (“Skeene”) is a good example of the crossover between insolvency related proceedings and criminal proceedings. In this case, the High Court considered the Official Receiver’s (“OR”) ability to disclose to the Serious Fraud Office (“SFO”) documents which had been obtained by the OR during the course of disqualification proceedings.