A great deal of insolvency litigation is funded by non-parties to a claim – for example, by a creditor or an “after the event” (ATE) insurer. Ordinarily such arrangements and their precise terms are confidential and are not required to be fully disclosed to a counterparty in litigation. In the recent case of Re Hellas Telecommunications (Luxembourg) [2017] EWHC 3465 (ch) (“Hellas”), the court considered the extent to which the underlying details of the litigation funders should be disclosed for the purposes of a security for costs application.

The Insolvency community in Scotland has watched with interest the case of Grampian MacLennan's Distribution Services Ltd v Carnbroe Estates Ltd and in particular Lord Woolman's eyebrow raising opinion at first instance that a distressed sale by a company of its major asset (an industrial unit comprising a warehouse, vehicle workshop and yard with gatehouse) had not constituted a gratuitous alienation where the sale has been off market at a price of £550,000 whereas the property had been valued at £1,200,000 on the open market or at £800,000 on a restricted 180 day marketing period

A recent TCC decision has concluded that the contractor insolvency provisions of the JCT form continue to apply after a termination by the contractor for repudiation. This conclusion may give rise to surprising results and potentially allow an employer to claim from the contractor additional amounts incurred in completing the works with a third party even after termination for the employer’s own default and/or repudiation.

UK burger restaurant chain, Byron Burger, has proposed a company voluntary arrangement (CVA) with its creditors in a bid to restructure the company's finances and rescue the business.

The creditor vote is due to take place on 31 January, with the CVA requiring at least 75% creditor consent for approval. The company is understood to be in talks with creditors and the proposed CVA is thought to be centred around the closure of underperforming restaurants and rent reductions at other branches.

A new funding round could be a good time to sort out capital complexity. We take a high level view.

Many privately backed companies go through several financing rounds and find they end up with a very complex capitalisation structure, with various classes of preferred shares, ordinary shares and deferred shares, not to mention employee incentives and debt instruments. A new funding round is a good opportunity to restructure and simplify this legacy.

The Inner House of the Court of Session has found that, where a business had no realistic prospect of continuing in existence, it was not appropriate to assess whether a property was sold at an undervalue by reference to a forced sale valuation.

The Court’s judgment serves as a valuable reminder of some fundamental principles of insolvency law.

The facts

Since the case of Perar BV v. General Surety and Guarantee in 1994, there has been some confusion and misunderstanding as to the implications of this case and whether insolvency amounts to a breach of contract, or more importantly, if it needs to be, when claiming on a performance bond.

This was recently discussed in the case of Ziggurat (Claremont Place) LLP v HCC International Company Plc just before Christmas.

Background

English courts recognise that shareholders hold a separate legal personality from the body corporate they own a stake in and will only go behind the corporate veil in limited circumstances. In the recent case of Onur Air Taşimacilik AŞ v Goldtrail Travel Ltd (In Liquidation) 1 , the Court of Appeal considered whether the financial means of the appellant’s wealthy controlling shareholder could be taken into account when making an order that the appellant had to make a substantial payment into court as a condition of being able to pursue its appeal.

The collapse of Carillion, plus the publication of the National Audit Office’s (NAO) timely and perceptive report (www.nao.org.uk/wp-content/uploads/2018/01/PFI-and-PF2.pdf) on private finance initiatives (PFI) and Private Finance 2 (PF2), has sparked renewed public focus on the impact of such events on government finances. This has led to some scaremongering from the media:

‘PFI deals costing taxpayers billions.’ BBC, January 18

The raft of European and domestic litigation surrounding Mastercard fees has been long running and frankly, brain achingly complex. Hidden in the masses of litigation, the topic has sparked little interest in insolvency practitioners. However, it has the potential to generate realisations in liquidated estates where there may otherwise be nothing to offer creditors, and it warrants attention as a result.