While not an exhaustive list, here is a reminder of some measures you might want to think about to help mitigate the effects of insolvency on construction projects. As with all these measures (and with insolvency generally) there are a number of complicated issues to be considered, so do seek advice as necessary.

Performance security

Introduction

The case ofBailey v Angove’s Pty Ltd heard in the UK Supreme Court has confirmed the general rule that an irrevocable agency will only be created in exceptional circumstances: there must be a specific agreement that the agent’s authority is irrevocable and the authority must be given with the intention of securing an interest of the agent.

In Lomas and others v HMRC [2016] EWHC 2492 (Ch), the High Court has confirmed that statutory interest payable on insolvency is not 'yearly interest' for UK tax purposes. The administrators therefore had no obligation to account for income tax on the interest payments made. The Court was also critical of HMRC's contradictory guidance on this issue.

Background

High Court considers “test case” of Wall v Royal Bank of Scotland [2016] EWHC 2460 (Comm)

The claims

The Claimant, Mr Wall (W), brought claims against the Defendant, Royal Bank of Scotland Group (RBS), in relation to RBS’s dealings with a now insolvent group of companies owned and controlled by W. W brought the claims in his capacity as assignee of the group’s rights and/or as beneficiary of a trust as declared by the group’s liquidators.

The Fatcs

A gift card retailer entered creditors’ voluntary liquidation with an estimated deficiency of £2.8 million. The liquidators subsequently sought declarations that various categories of payments made to the wife of the sole director and shareholder of the company, who was employed as its book keeper, constituted transactions at an undervalue. Mrs Lawson claimed that the payments, which were made to a joint bank account in her and Mr Lawson’s name, were made to discharge expense claims.

The Decision

Key Points

The Insolvency (England and Wales) Rules 2016 (the “2016 Rules”) were published on 18 October 2016 and laid before Parliament on 25 October 2016. The 2016 Rules are due to come into force with effect from 6 April 2017. The 2016 Rules are the product of an extensive programme of consultation with a range of parties, including the insolvency profession, creditor representatives, insolvency regulators and public bodies. The aim was to streamline the process and reduce regulation with the ultimate goal of increasing returns to creditors.

The Facts

The applicants were judgment creditors of a Robert Williams (Robert). They obtained a charging order against Roberts’s beneficial interest in 75% of the shares in a company in administration and eventually became full legal owners of those shares.

The Facts

In December 2015, Hart J heard (and refused) an application by Mr Golstein for revocation of a decision of 31 May 2012 passing a proposal by Mr Bishop to enter into an Individual Voluntary Arrangement (IVA). Mr Golstein, who was claiming a sum of £122,000 from Mr Bishop, appealed the decision on the basis that his claim was not correctly admitted for voting purposes and that there was material non-disclosure by Mr Bishop which led to the passing of the IVA.

The Decision