The High Court has handed down a 533-page judgment in proceedings brought by the liquidators of BHS against its former directors for wrongful trading and misfeasance trading, finding them personally liable for at least £18 million. The case is of great significance to directors of distressed companies. We analyse some key points arising.

Click here to view the judgment.

Background

When appointing administrators out of court, there is requirement to specify the date and time the appointment is made. This is a development arising since April 2017 as a result of the Insolvency Rules 2016 coming into force. Given that appointments are generally effective at the point of filing, it has been unclear how (absent a crystal ball) practitioners should address the requirement when preparing the Notice of Appointment form. A recent High Court decision resolves the issue, confirming that a notice making reference to a future filing is acceptable.

The UK Government is implementing measures to strengthen corporate governance and insolvency laws. The aim is to increase accountability, improve creditor protection and promote company rescue. This note comments on a selection of the proposals which were published at the end of the summer.

Transparency and shareholder stewardship

In Banca Turco Romana S.A. (in liquidation) v Cortuk and Others, the Commercial Court in London has underlined the need for applicants to give full and frank disclosure when seeking relief at ex parte (without notice) hearings.

As a result of substantial and serious failings, some apparently deliberate, Mr Justice Popplewell set aside an earlier freezing order he had made in favour of a liquidator and declined to continue it.

Background

This is an interesting and frequently asked question. It is therefore perhaps surprising to learn that there is no direct case law authority on this point. Whilst the registration of a foreign judgment debt might serve to strengthen a creditor’s position should arguments about the validity of a judgment be made (as the court is likely to treat a registered judgment the same as a UK judgment), is it really necessary in these circumstances?

The court has stressed the importance of validly serving a Statutory Demand before presenting a Bankruptcy Petition. The creditor must do all that is reasonably required to bring the service of the Statutory Demand to the attention of the debtor. Without effectively serving a Statutory Demand on the debtor, presenting a valid Bankruptcy Petition is impossible.

Background