On 22 November 2016, the European Commission published a draft directive on insolvency, restructuring and second chance. In this briefing we consider the proposals and what it means for European insolvency and for the UK.

On 22 November 2016, the European Commission published a draft directive on insolvency, restructuring and second chance (the Proposals).

What are the Proposals? The Proposals have three main parts:

In the recent case of BTI 2014 LLC v Sequana SA & others [2016] EWHC 1686, the High Court has held for the first time that a dividend can be challenged as a transaction entered into at an undervalue within the meaning of section 423(1) of the Insolvency Act 1986 (the “IA”).

The Facts

The facts of the case are long and complex but for present purposes the pertinent facts are as follows.

Arjo Wiggins Appleton Limited (now Windward Prospects Limited) (“AWA”) was a wholly owned subsidiary of Sequana SA (“SSA”).

Summary

Third parties associated with an employer may find themselves liable to contribute to the employer's occupational pension scheme. Where a pension scheme is in deficit, the Pensions Regulator has powers - so-called 'moral hazard' powers - that can require a third party to give financial support or a specific payment to the pension scheme.

Only a month ago we were singing the praises of the CVA and calling them the saviour of the high street following the creditors’ approval of the BHS CVA. (See our earlier blog Move over Mary Portas, CVA’s are the real saviour of the High Street).

The suitability of the collective consultation regime under the Trade Union and Labour Relation (Consolidation) Act 1992 (“TULRCA”) in an insolvency scenario has always been a hot topic amongst insolvency professionals.

One of the functions of the UK Insolvency Service is to investigate directors’ conduct and if appropriate to commence directors disqualification proceedings or enter into disqualification undertakings. As the Insolvency Service has recently reviewed in its Newsletter the type of conduct which led to the longest disqualification bans in 2014/2015, now would seem like a perfect opportunity to reflect on the lessons learned from the biggest offenders.

It has been an interesting 12 months in the world of insolvency and restructuring.

Summary

We reported in December 2014 that the amendments to the EC Regulation on Insolvency Proceeding (the Recast Regulation) were virtually finalised and agreed between the various legislative organs of the European Union.

Finally after several years, the debate is now over and the European Parliament has now approved the final text – broadly as it was in December 2014. The outcome is good news for cross border corporate restructurings and insolvencies around Europe, but it will not come into force for over two years.

Next steps

The recent English High Court decision in Horton v Henry [2014] EWHC 4209 (Ch)has conflicted with the earlier decision in Raithatha v Williamson [2012] EWCA Civ. 799 and leaves the law unclear as to whether a debtor’s pension forms part of their bankruptcy estate.

A trustee in bankruptcy’s entitlement to seek an income payments order (“IPO”) in respect of a bankrupt’s income is governed by section 310 of the Insolvency Act 1986 (the “IA”). Under section 310(7) of the IA the income of a bankrupt:

Snapshot

The Court of Appeal’s judgment in Jervis v Pillar Denton Limited (Game Station) [2014] EWCA Civ 180 on 24 February 2014 has brought welcome clarity to when rent qualifies as an administration expense.

The Court of Appeal has ruled that: