The recent spate of high-profile company voluntary arrangements (CVAs), including those of BHS, Store 21 and more recently Love Coffee, The Food Retailer Group and Blue Inc, has placed this corporate rescue tool back in the spotlight.

CVAs can be a useful mechanism for turning around a failing business, but it is clear that they are no panacea. First, they don’t always work, and BHS is a striking example of a CVA failing to save a business despite compromising a large number of leasehold liabilities.

Changes to the Insolvency Act 1986 ("Act")

SBEEA 2015 makes a host of supplemental amendments to the Act, the general effect of which is remove references to creditors' meetings and replace them with the alternative decision processes.

As a consequence:

Privilege and insolvency

A recent Court of Appeal decision means insolvency practitioners should think twice before instructing solicitors. The case confirmed that whilst there is nothing wrong in principle with solicitors acting for both a trustee in bankruptcy or liquidator and a creditor of the bankrupt or insolvent company, conflicts can arise. Where they do, solicitors may be required to cease acting for the creditor.

Administrators can be validly appointed to a company by the holder of a floating charge which was given by the company in breach of a negative pledge in favour of an existing secured creditor and even if, both at the time of the purported creation of that floating charge and on the day of the purported appointment of administrators, the company had no assets which were the subject of the floating charge.

The recent Chancery Division judgment in Re Gracio Property Company Limited [2017] B.C.C 15 (“Gracio”) saw the court make an order for a compulsory liquidation without any winding-up petition having been issued.

The facts

The Court of Appeal has recently overturned the commonly held belief that a validation order would normally be made if the disposition made by a company subject to a winding up petition was done so in good faith and in the ordinary course of business at a time when the parties were unaware of the existence of the petition.

1. The starting point

Section 127 Insolvency Act 1986 provides:

Gift vouchers are often considered an easy and convenient option when purchasing gifts for friends and family. For the relative with unusual taste, the friend who lives in another part of the UK or the husband and wife to be who already have everything, a gift voucher may appear to be the ideal gift. But what happens if, before the recipient has the opportunity to redeem the voucher, the relevant retailer becomes insolvent?

In terms of current insolvency law consumers are ordinary creditors who rank at the bottom of the statutory hierarchy of creditors.

Last year we reported on a decision of the Scottish Court of Session which suggested that greater leniency may apply to the interpretation of performance bonds in Scotland than in England (see our earlier Law-Now here). A further decision from the Court of Session issued last month would appear to support this trend.

Fife Council v Royal & Sun Alliance Insurance plc

Last years decision of the High Court in Kean v Lucas (Re J&R Builders (Norwich) Ltd) [2016] EWHC 2684 (Ch)puts into further context a number of cases concerning the rights of creditors to requisition a meeting to replace a creditors’ voluntary liquidator (or by analogy officeholders generally). But does it provide any answers?

References below to ‘Sections’ or ‘Rules’ are references to the Insolvency Act 1986 and Insolvency Rules 1986 respectively.

The Law at a Glance

ADVISORY | DISPUTES | TRANSACTIONS “Gagging orders”: an office holder’s secret weapon December 2016 Introduction Practitioners are fully aware of the extensive powers available under ss 235 and 236 of the Insolvency Act 1986 (IA 1986) allowing administrators and liquidators as office holders (OHs) to require individuals and organisations to disgorge information.