Key Issues
The transaction documents (eg ISDA, GMRA or prime brokerage agreements) for derivatives transactions (or other transactions involving netting provisions) are usually governed by English law or New York law. However, there are a number of local law issues which our clients should consider when proposing to enter into such transactions with offshore counterparties, including the following key issues:
In this DechertOnPoint, we summarise HM Treasury’s work to establish effective resolution arrangements for investment banks and firms, which resulted in the introduction of a special administration regime (“SAR”) earlier this year.
HMRC is leading an increasingly tough stance against owners of businesses that have failed to pay their taxes before going bankrupt, says City law firm Wedlake Bell.
Figures from the Insolvency Service reveal that in the last year Bankruptcy Restriction Orders (or equivalent undertakings) were obtained against 443 bankrupts because of neglect of their business - a majority of which were alleged to have consistently failed to pay taxes to HMRC. This was an increase of 21% on last year and concern actions taken against sole traders and partnerships (Year ending March 31).
Independent Insurance Co Limited (In Provisional Liquidation) v Aspinall and another UKEAT/0051/11
Independent Insurance Company - IIC- went into provisional liquidation in June 2001. Half of its employees were made redundant including Mr Aspinall and Mrs O’Callaghan. They issued proceedings claiming a protective award when IIC failed to comply with its collective consultation obligations, consult with employee representatives or arrange for necessary elections.
Recent remarks by the English High Court in the insolvency case Green (Liquidator of Stealth Construction Limited) -v- Ireland [2011] EWHC 1305 (Ch) suggest that in some circumstances, and at least in the context of fast-moving real property transactions, an exchange of emails may well satisfy the requisite formalities for creation of a binding and enforceable contract.
Sections 216 and 217 of the Insolvency Act impose draconian sanctions on directors of liquidated companies who reuse "prohibited names". Prohibited names are names that are identical to, or "suggest an association with", a company that has gone into liquidation and of which they were previously directors. The sanctions include criminal penalties and personal liability for debts. It has always been difficult for advisers to confidently advise directors whether a proposed name for a new company would be a prohibited name, given the vague nature of the phrase "suggest an association".
In the much anticipated decision of Belmont Park Investments PTY Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc [2011] UKSC 38 the Supreme Court has unanimously dismissed the appeal of Lehman Brothers Special Financing Inc (“LBSF”) and in so doing provided clarification as to the scope and application of the anti-deprivation rule (the “Rule”).
The CBI has responded to CRD4 publication saying it believes the Basel III reforms are "an important piece of the jigsaw to strengthen the global banking system", but that benefits from greater financial stability must be proportionate to the cost businesses will bear. In the CBI's opinion, the new rules:
On 10 December 2010, the High Court gave judgment in a joint application by the administrators of certain companies in the Nortel and Lehman estates for directions on the status of any financial support direction (FSD) or contribution notice (CN) issued to the companies in administration or any subsequent liquidation (Bloom & Others v. The Pensions Regulator (Nortel, Re) [2010] EWHC 3010 (Ch)).
The UK Supreme Court, which is the UK's highest court, has handed down its long-awaited decision in Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc [2011] UKSC 38, in which the Court considered the validity and enforceability of so-called "flip" clauses under English bankruptcy law.