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

The Insolvency Service has just released its personal insolvency statistics for 2017 revealing an upturn in overall personal insolvencies (just under 10% more than in 2016) and an increase of around 1/5th (19.8% on 2016) of people entering into Individual Insolvency Arrangements (IVAs). More people entered into IVAs last year than in 2008 (when many consider the credit crunch took its grip).

A company enters into compulsory liquidation when the court makes a winding up order. Upon the order being made, the Official Receiver ("OR") is automatically appointed as liquidator, however, the company's creditors may nominate an alternative licensed insolvency practitioner to act as liquidator. A liquidator's primary function is to realise the company's assets for the benefit of its creditors.

Following three profit warnings in recent months, the collapse of Carillion under a mountain of debt could hardly be described as a surprise. The fact that Carillion has entered compulsory liquidation may raise eyebrows. Administration would have allowed the company to continue operating whilst buyers were sought for those parts of the business that remained viable; liquidation is an acknowledgement that, by the time it collapsed, Carillion simply had no assets to sell that anyone would have been interested in buying. All that was left were the contracts.

The Facts

The latest decision in the Shlosberg saga that has turned the issue of privilege and use of documents on its head - this time considering the practical implications of how office holders can use information they have obtained by compulsion for the purposes of their investigations.

The Facts

Stevensdrake Limited, a law firm, made a claim against a Liquidator for fees owing under a Conditional Fee Agreement (CFA) made between the two on 10 April 2008. The parties had worked together on various insolvency matters for many years.

At just before 7.00am on Monday 15 January 2018 following an urgent telephone hearing, a High Court Judge agreed to place six of the Carillion Group companies into compulsory liquidation and appoint the Official Receiver as Liquidator. At the same time, six partners of PwC were appointed as Special Managers to assist the Liquidators.

It is fair to say that the insolvency of Carillion has sent shockwaves through the construction industry. While this may be the catalyst for change, insolvency has unfortunately been a risk which has been realised all too often. Looking at the current position, we set out the top ten issues that employers, professionals and the supply chain should consider in the event of main contractor insolvency.

In light of the business news over the last year, including the most current news of Carillion, it is important to know how business failure impacts on employment rights.