At the start of 2017, UK businesses had reported a 33% risk of insolvency, compared to the end of 2017 which saw that figure increase to nearly 40%.

These figures were calculated by drawing together key performance indicators including balance sheets and records of the directors’ successful (or unsuccessful) directorship history.

The recent decision in Leeds v Lemos may create significant problems for Trustees in Bankruptcy as they attempt to fulfil their duty of realising a Bankrupt’s estate for the benefit of his creditors.

The case centred on the wish of the Trustee in Bankruptcy to rely on documents that the Bankrupt (and some third parties) claimed were privileged. The Trustee in Bankruptcy therefore asked the Court to compel the Bankrupt to waive privilege, so that the documents could be referred to in legal proceedings..

This article provides an essential update for insolvency practitioners on the proposed Insolvency Rules 2015 and the end of the insolvency exemption on Conditional Fee Agreements.

The end of the CFA?

Most Landlords, and Insolvency Practitioners (“IP”s), will be well aware of the issues and liabilities that can arise where a tenant (whether it be a company or individual, residential or commercial) experiences financial difficulties. Competing interests can lead to difficulties for all parties and, potentially, legal disputes.

Since the Welfare Reform and Pensions Act 1999 (“1999 Act”), it has been understood that the rights of a bankrupt under a tax approved pension plan are excluded from the bankruptcy estate and do not vest in his Trustee in Bankruptcy.

That said, where a Bankrupt was already drawing an income from his pension, his Trustee could seek an Income Payments Order over that income.

The Court of Appeal has handed down an important judgment for landlords and insolvency practitioners, in the case of Jervis v Pillar Denton; re Games Station (“Game”).

The impending abolishment of the ancient common law self-help remedy of distress will affect landlords, tenants and insolvency practitioners.

What is Distress?

The ability of landlords to recover arrears of rent without going to Court, by instructing bailiffs to seize, impound and sell certain goods located at the premises and belonging to the tenant. This right will remain until 6 April 2014, but after that date distress will no longer be available and commercial landlords will instead have to rely on Commercial Rent Arrears Recovery (“CRAR”).

A new Statement of Insolvency Practice relating to pre-packaged sales in Administration has been issued and has effect from 1 November 2013.

This provides for earlier notification to creditors of the sale and the justification for it and provides a more extensive list of information that must be included.

The main changes are:

The majority of businesses have periods of stress and distress during their life cycle. The keys to managing these periods to achieve a successful profitable business are recognition, decision and implementation.

In most cases, management are aware (from available internal management information) of issues arising before they do in terms of a potential reduction in revenue or increase in cost. Once these periods are recognised management can move to address them by taking decisions to manage the situation to a positive outcome.

When being sued, corporate and individual defendants should always confirm that the plaintiff has not been previously discharged in bankruptcy and failed to disclose the claim in the proceeding as an asset of the bankruptcy estate. In Guay v. Burack, 677 F.3d 10 (1st Cir. 2012), the plaintiff brought numerous claims against various governmental entities, governmental officials and a police officer.