Those thinking that the trials and tribulations of the recession may have passed them by and that, if all else failed, at least the pension was safe, may have to think again following two recent court decisions in which pensions came under attack from creditors and trustees in bankruptcy.
The vexed question of whether a future right to receive a pension can be attached to satisfy a judgment, or can be claimed by a trustee in bankruptcy, has long since troubled the courts.
For landlords, a tenant in administration is just about your worst nightmare. A moratorium prevents you from suing for outstanding arrears or forfeiting the lease and you may be left with an empty unit generating no income.
Now it seems if administrators are using your premises, the rent might not even be paid as an expense simply because of when they were appointed. So what has happened?
The current position is that 8 players have been reported as having objected to their contracts of employment transferring to the "new Rangers". Charles Green has apparently threatened to litigate any departing players given that, in his view, they are in breach of contract.
In Re JT Frith Limited [2012] EWHC 196 (Ch):
- the terms of an intercreditor agreement; and
- some unwitting help from the junior creditors,
enabled a senior secured lender to benefit indirectly from the prescribed part on the insolvency of its debtor.
Existing law at a glance
The Enterprise Act 2002 introduced the prescribed part under a new section 176A(2) of the Insolvency Act 1986. It reserves part of the floating charge recoveries for unsecured creditors.
Since then, the courts have held that:
At this time of year, sports pages are normally rife with transfer speculation before the new domestic seasons begin across the UK. This summer is different however, due to increased interest in Glasgow Rangers and the effect of “TUPE transfers” of players to the Rangers Newco.
This case considered the validity of the appointment of administrators in circumstances in which the administrators had not received consent from the Financial Services Authority (the FSA) to act.
There are some strict rules which apply when an individual is made bankrupt. Some of them were brought to the fore recently in the case of Floyd Foster v Davenport Lyons (A Firm) in the Chancery Division EWHC 275 (Ch).
The main cardinal rules are:
The recent case of F Options Ltd v Prestwood Properties Ltd concerned the setting aside of a transaction as a preference under section 239 of the Insolvency Act 1986.
A preference arises when a company's creditor is put in a better position than they would otherwise have been in the event of the company's insolvency. Transactions may be a preference whether or not the parties are connected, but where it can be shown that there is a connection within section 249 of the Insolvency Act 1986, two important advantages are gained:
The Scottish Government launched a consultation on the question of the reform of Scotland’s bankruptcy law earlier this year, and a lengthy and detailed consultation paper was released. Those of us who have heard the Accountant in Bankruptcy speak at conferences and the like over recent months eagerly awaited a discussion document which would reflect her guarded admission that things had perhaps swung rather too far in favour of debtors, and the time was right to try to redress that balance by looking towards the impact of debt on creditors.
BESTrustees v Kaupthing Singer & Friedlander [2012] EWHC 629 (Ch) (High Court Chancery Division 16 March 2012)
Background