Following substantive proceedings in the BVI, Mr Akbar was ordered to pay around $16m. The Claimant registered that judgment in England and applied for a charging order over a property believed to be owned by Mr Akbar in Trevor Square (valued at £9m). In response, Mr Akbar contended that the property – which he and his family had occupied rent free since 2005 – did not belong to him, but was beneficially owned by a company (Legacy Holdings Limited), which was in turn held within a discretionary trust (the Garden Trust).
This is the first article in 'Back to Basics', a series of articles looking at insolvency processes in Scotland. In this article I examine the court process for winding up a company.
A winding up petition is a form of legal action that can be used when a company is unable to pay its debts as they fall due. Sections 122 to 124 of the Insolvency Act 1986 (‘the Act’) deal with how to wind up a company in Scotland.
When is a company deemed unable to pay debts?
In this two part article we highlight for directors some of the main ways in which the general protection of limited liability does not apply or can be lost.
Part one of this article discusses those exceptions to the principle of limited liability that arise in insolvency or distress situations. Part two deals with the provisions that have more general applicability.
Breach of duties
Opening the door for the SME market, Sir Alistair Norris has sanctioned the first ever restructuring plan for a “mid-market” company. The plan sanctioned in Amicus Finance PLC (in administration) is also the first restructuring plan proposed by insolvency practitioners and the first to cram down a secured creditor.
The sanction judgment is short, but the adjourned convening hearing that was dealt with by Mr Justice Snowden (the first hearing was before Mr Justice Trowers) gives some insight into the plan.
To mitigate the risk of claims being made against them, personal representatives, solicitors and executors involved in distributing estates should commission bankruptcy and insolvency searches abroad as well as in the UK. However, there are also other areas of law where due diligence might include overseas searches. Commercial, planning and conveyancing lawyers should all consider international searches.
Limited liability is one of the fundamental concepts in our understanding of company law. Even people who know very little about the working of limited companies may know that directors and shareholders are not liable for the debts of their companies. For the last 160 years, the protection of limited liability has been a key factor in economic growth and commercial activity as it has allowed entrepreneurs to speculate and take risks that they might not have been willing to do if the risk of personal liability overshadowed their decision-making.
The recent case of Re A Company [2021] EWHC 2289 (Ch) outlines how the coronavirus test for winding up petitions will be applied by the Courts.
The High Court has ruled that a claim for a declaration regarding a borrower’s obligations to provide information under a facility agreement was not a claim which itself derived from borrower’s French insolvency proceedings for the purposes of Article 6(1) of the Recast European Insolvency Regulation (EU) 2015/848 (the “Recast Insolvency Regulation”).
OVERVIEW
Welcome to the next edition of the insolvency insight bulletin from the insolvency specialists at Quadrant Chambers. All cases link to the relevant judgments.
Case law
The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, which came into force on 30 April 2021, introduced several changes to pre-pack sales to connected parties in order to restore public confidence in this type of restructuring deal.