1 April 2016 will see the insolvency profession fall in line with other civil litigation as the exemption which enabled the recoverability of CFA success fees and After the Event (ATE) insurance premiums from the unsuccessful party to litigation comes to an end. This recoverability was abolished in other civil litigation in April 2013, principally as one of a number of changes intended to control and reduce the costs of civil litigation.
This article contains a useful re-cap of the changes made to SIP 16 and the introduction of a pre-pack pool in November 2015. It also takes an early look at whether the pre-pack pool is working, citing some statistics on “take-up” since the pool’s inception and some examples of pre-packs to connected parties since the pool was introduced.
What is a “pre-pack”?
For all corporate insolvencies starting on or after 6 April 2016 insolvency office-holders are now required to submit a report on the conduct of anyone who was a director of the insolvent company in the 3 years leading up to the insolvency, irrespective of their conduct. Currently, reports are only required where office-holders consider a director’s conduct makes them unfit to be involved in a company’s management in the future.
The Court of Appeal has reiterated some important rules for funders involved in debt purchase. Banking Litigation specialist Alasdair Urwin looks at the recent case of Bibby Factors Northwest v HDF and MCD [1].
Buyer beware
This case concerned a factoring agreement, pursuant to which a funder (Bibby) purchased unpaid invoices from another company (the Assignor), including debts owing from the defendant companies (the Customers).
On 24 March, HMRC published a summary of responses to the December consultation on Company Distributions, together with details of the Government's position on the issues raised. The December consultation was covered in my 3 February blog.
It is now clear that leases cannot be assigned to the tenant’s guarantor but serious issues arise out of the recent High Court case of EMI Group Limited v O&H Q1 Limited which specified that any lease assignment by a tenant to its guarantor is void. This means that the assignment is not effective, the lease is still held by the previous tenant and the intended assignee remains the guarantor of that previous tenant (and does not become the new tenant of the lease). In addition, be aware that the court’s decision applies retrospectively.
BLP real estate disputes partner Roger Cohen summarises a recent court decision about whether or not a landlord had accepted a lease surrender by the way it handled “jingle mail”, a letter returning the keys, from the administrators of the insolvent tenant. Jingle mail is a tactic used by administrators. The landlord argued successfully that ,on this occasion, the tactic failed.
From 6 April 2016, debtors in England and Wales who wish to enter bankruptcy will need to apply online and will no longer be able to petition the Court. The final form statutory instruments to introduce the necessary changes were published on 22 February 2016.
In order to promote a "rescue culture", TUPE says that where the transferring business is the subject of bankruptcy or insolvency proceedings instituted "with a view to the liquidation of the assets of the transferor", the employees will not transfer and any dismissals connected with the transfer are not automatically unfair.