Yesterday, the United Kingdom’s Commercial Secretary to the Treasury launched a consultation on a new special-resolution regime, Special administration regime for investment firms, to strengthen the government’s ability to handle future insolvencies of failing investment banks to minimize cost and disruption of the overall national financial system.

The recent sale of the bulk of Connaught's failed social housing group has received a lot of positive press attention of late, due largely to the number of jobs the deal is reported to have saved.

The sale appears to have occurred within days of Connaught going into administration. While there has been no suggestion that the deal was effected as a "pre-pack", the speed with which the sale was carried out echoes the most prominent feature of true pre-pack deals.

In the recent judgment of Gray and others v G-T-P Group Limited, the High Court considered whether a charge fell within the scope of the Financial Collateral (No.2) Regulations 2003 (“the Regulations”) and would not therefore be void against a liquidator, despite not being registered with the Registrar of Companies.

Following proposals Treasury made at the end of 2009, it has now published for consultation draft regulations setting up a special resolution regime for investment banks. The regime will apply to firms that meet all of the following three conditions:

The demise of Connaught's social housing maintenance business will have left a great deal of its local authority clients wondering what happens next when you need services to be undertaken and cannot afford to wait for the contractor's administration to pan out. Such clients need to be aware of what they can do in this situation under the contract. First, do some homework: who else is there in the marketplace? Is there a potential buyer of the insolvent firm's business and will any such purchase include the contract that it has with you?

On 17 September, the Pension Regulator's Determinations Panel announced that it had issued a determination that six companies within the Lehman Brothers group (including the group's main operating companies in the UK as well as the US parent Lehman Brothers Holding Inc.) should provide financial support to the Lehman Brothers Pension Scheme. This followed a hearing on 8-9 September 2010.

Guidance published by HMRC in its Corporate Finance Manual has recently been updated to reflect a change in practice regarding the corporation tax treatment of debt for equity swaps.

Debt for equity swaps are commonly used in corporate restructuring, particularly when a company is in financial difficulty. They may also be encountered in the termination of joint venture arrangements where, prior to the sale of shares in the joint venture company by one co-venturer to the other, the parties wish to convert any loans made to the company into shares.

Insolvency procedures involving companies are complex and generally take a long time to complete. There is plenty of jargon which adds to the confusion, whereas all that an unsecured creditor usually wants to know is how to make a claim for the monies owed to him by the company, to whom the claim should be made, how long it will take to decide the claim and whether there is a possibility of recovering any monies from a company which is obviously experiencing financial difficulties.

The High Court has in the past month ruled on two challenges to company voluntary arrangements (CVAs) on the grounds of unfair prejudice and material irregularity,  reaching a different conclusion in each case. 

Introduction