Recent cases we have been involved in have highlighted the need for Insolvency Practitioners to pay careful attention to the effect that block transfer orders have on administrations where the exit route is a creditors' voluntary liquidation ("CVL"). Failure to do so could risk the appointment of liquidators being invalid.

The statutory requirements

On 30 September 2016, the Competition and Markets Authority (“CMA”) published its finding that two companies involved in the online retail of licensed sport and entertainment posters and frames had breached the Competition Act 1998 (“CA98”) by entering into agreements (or, at least, ‘concerted practices’) to artificially inflate the prices charged for certain products. A formal charge was accepted by the main protagonist, Trod Limited (in administration) (“Trod”) and fines imposed, which became payable by Trod’s administrators as of 13 October 2016.

The Association of Business Recovery Professionals suggests that unsecured creditors, on average, receive 1% of the debt due to them from a company that undertakes a pre-pack sale and 3% in cases in which a going concern sale is achieved.  Given such poor prospects, investment of time in identification and reduction of insolvency risk can pay dividends.

There are a number of warning signs of supply chain risk, and it is key that you are familiar with these:

The Court of Appeal in England has confirmed that a Trustee in Bankruptcy (“TIB”) cannot force a bankrupt person to elect to take their uncrystallised pension benefits solely so that the TIB can recover the benefit as income for the member's creditors. The decision in Horton v Henry (2016) clarifies the legal position after previous conflicting judgements had been given by the Courts.

A recent Court of Appeal decision in the UK has ruled that individuals facing bankruptcy cannot be forced to hand over their pensions to pay off outstanding debts. We examine the affect insolvency can have on your pension in this jurisdiction.

The recent UK Court of Appeal decision in Horton v Henry ruled that there was no requirement to draw down funds held in a pension in the event of bankruptcy. As a result of this decision, the UK legal system now appears to acknowledge that pension funds should be out of the reach of a bankruptcy trustee.

Horton v Henry: Pensions clarified

We previously discussed the uncertainty surrounding the treatment of pensions in a bankruptcy which arose from two conflicting high court decisions: Raithatha v Williamson [2012] EWHC 909 (Ch) and Horton v Henry [2014] EWHC 4209 (Ch).

In Hinton v Wotherspoon [2016] EWHC 623 (CH) (where this firm successfully represented the trustee in bankruptcy, Lloyd Hinton of Insolve Plus Limited), the court commented that the approach in Horton v Henry [2014] EWHC 4209 (Ch) was “plainly correct”.

In the case of Re BW Estates Ltd the High Court considered the validity of a directors’ out of court appointment in circumstances where there was technically an inquorate directors’ board meeting.

The recent Court of Appeal decision in Horton v Henry has highlighted the protection afforded to a bankrupt holding a private pension to the detriment of his bankruptcy creditors.

Facts

The High Court in London handed down judgment on Part C of the Lehman Waterfall II Application on 5 October 2016.

The judgment examines the extent of creditors’ entitlements to Default Rate interest on debts arising under ISDA Master Agreements governed by English law and New York law. As some £4.4 billion of LBIE’s admitted claims arise under ISDA Master Agreements and the debts were outstanding for more than five years, this judgment will materially influence the amount of money which must be applied in satisfaction of creditors’ entitlements to statutory interest.

An opinion issued this week is the first examination by a Scottish court of the principle of 'modified universalism' and the requirements for an enforceable floating charge where all the company's property is situated in a non-UK jurisdiction.

This opinion by Lord Tyre in the Court of Session concerns three companies incorporated in Scotland, but which carried on business in India.