Karhoo, a US incorporated company able to benefit from the Chapter 15 US bankruptcy code provision for foreign insolvency proceedings following UK Administration.
A recent decision in the High Court has seen an application for pre-action disclosure of an insurance policy dismissed because the defendant was not insolvent.
Peel Port Shareholder Finance Company owned a warehouse that was damaged by a fire caused by Dornoch. They argued that their claim was highly likely to win but that, if it did, it would cause Dornoch to become insolvent.
Peel Port therefore sought ‘pre-action disclosure’, meaning Dornoch would have to disclose applicable insurance cover information to Peel Port before they decided whether to proceed.
On 2 March Cambridgeshire-based merchant WellGrain went into administration, reportedly owing at least £15m to almost 300 creditors, many of those being farmers.
The administrators' report has now been published and indicates that the unsecured creditors - including some 155 farmers - will expect to receive between 1.4 - 6.7 pence for every pound they are owed.
It is an announcement which will no doubt be met with dismay by those creditors. However, it is not unusual that unsecured creditors of an insolvent company will receive little or no payment.
Key Points
- Directors cannot file a notice of intention to appoint (NoI) without a ‘settled intention’ to appoint an administrator
- NoIs cannot be used where there is no qualifying floating charge holder (QFCH)
- The judgment has implications for validity of appointments where requirements not met
The Facts
[2017] EWHC 1206 (Ch)
Deputy Judge Alexander QC had to consider an application for an order that R be restrained from proceeding further with a creditor’s petition to wind up B. The Judge was in no doubt that the application was misconceived. First B was not unable to pay its debts. B on the evidence provided to the court was solvent with cash in hand and a substantial unused credit facility. Further, the reason B had not paid the substantial sums claimed was that it had arguable defences as well as substantial cross-claims of its own. The Judge was clear that:
The High Court has formally adopted new guidelines approved by the fledgling Judicial Insolvency Network (“JIN”) designed to encourage and enhance communication between courts where parallel insolvency proceedings have been commenced in different jurisdictions (the “Guidelines”).
A Court of Appeal judgment held that a company must have a settled intention to appoint an administrator when filing a notice of intent (NOI) under paragraph 26 of Schedule B1 to the Insolvency Act 1986 (“Schedule B1”) . The court also confirmed that an NOI cannot be filed in the absence of a qualifying floating charge holder (QFCH) on which to serve the notice.
Background
The bankrupt and her husband, the appellant, were joint tenants of a business premises pursuant to an underlease. The trustee in bankruptcy disclaimed ‘all my/our interest in Leasehold property under the terms of the [underlease] in respect of [the property]’.
Appellant’s Case
The appellant contended that the disclaimer operated such as to prevent the landlords from claiming for rent in the bankruptcy estate post disclaimer.
Landlords’ Case
Court refuses application for pre-action disclosure of insurance policy
The High Court has refused an application for pre-action disclosure of the public liability insurance policy of a company that, if litigation were pursued against it, was likely to become insolvent.
Background
The Supreme Court in London today gave judgment in the Waterfall I appeal, a dispute as to the distribution of the estimated £8 billion surplus of assets in the main Lehman operating company in Europe, Lehman Brothers International (Europe) (LBIE).
LBIE entered administration on 15 September 2008 and has now paid its unsecured creditors dividends of 100p in the £. The Waterfall I Supreme Court appeal addressed some of the key issues as to who should receive the surplus, which we discuss below.
“So-called” Currency Conversion Claims