Construction litigation is no stranger to insolvency, including insolvent claimants. This is also the case for adjudication, a fast and commercially driven form of dispute resolution for the construction industry. However, there has been considerable uncertainty as to the enforceability of adjudicators’ awards where a claimant is insolvent and receives a favourable decision. Recent cases have shed some light on this issue and have started to untangle the statutory difficulties when insolvency meets adjudication.
Summary and Key Takeaways
Insolvency in the construction industry is unfortunately never too far away and it would be surprising if anyone, at least indirectly, who is reading this article has not been affected.
In June 2019 the Government announced a plan to introduce a new “breathing space” scheme to protect individuals and families struggling with problem debt and to give those individuals and families extra help and time to get their finances under control.
The Pension Schemes Bill 2019 is causing a marked degree of consternation in the restructuring community. The proposed legislation introduces new offences that can be prosecuted in the criminal courts and further moral hazard powers that are likely to significantly reduce the directors’ and insolvency practitioners’ ability to provide commercial and creative solutions to creditors of financially stressed companies.
At clause 107, the Bill introduces two new criminal offences and below we address the concerns these cause:
This article was first published in The Commercial Litigation Journal.
The Chancellor of the High Court has published guidance on how the courts will deal with the e-filing of a “notice of appointment of an administrator” when the court is closed.
The creditor, Tall Trade Limited, claimed the first two quarterly repayments due under a loan facility agreement made in 2019 concluded with the debtor, Capital WW Investment Limited. The loan was for €17 million over a two year term. Both companies were incorporated in the BVI.
Re System Building Services Group Limited [2020] EWHC 54 (Ch)
Summary
A recent High Court ruling has considered the character and extent of directors’ duties in the context of insolvency.
In System Building Services, Insolvency and Companies Court Judge Barber (“ICCJ Barber”) considered, amongst other things, the nature of a director’s duties to a company and whether those duties survive the company’s entry into an insolvency process.
The High Court recently ruled that the general directors’ duties prescribed by sections 171-177 of the Companies Act 2006 (“CA 2006”) (the “General Duties”) continue to apply to directors after their company has entered administration or creditors’ voluntary liquidation (“CVL”). This is notwithstanding that after the appointment of an administrator or liquidator, the ability and rights of directors to control the company are legally and practically curtailed.