Letting a single property for a limited period of time can amount to “carrying on business” for the purposes of section 265(2)(b)(ii) of the Insolvency Act 1986 (IA 1986), as confirmed in the recent case Durkan v Jones [2023] EWHC 1359 (Ch).

Background

The recent judgment in City Gardens Ltd v DOK82 Ltd [2023] EWHC 1149 (Ch) serves as a useful reminder of the extent of, and principles governing, the English court’s jurisdiction to wind up a company on the basis of inability to pay its debts.

Background

City Gardens Limited (C), and DOK82 Ltd (D), had entered into a “memorandum of understanding” (MoU) in relation to a significant debt owed by D to C.

In Re Scherzade Khilji (in bankruptcy) the court provided useful guidance on when the three-year "use it or lose it" limitation period to realise a bankrupt’s primary place of residence (provided by section 283A of the Insolvency Act 1986) commences.

Background

This case concerns the property interests of Ms Scherzade Khilji (Ms Khilji), who was declared bankrupt on 2 July 2018. Her trustee in bankruptcy was appointed on 7 August 2018 (the trustee).

In Short

The Situation: Historically, creditors pursued by liquidators under the unfair preference regime could rely on a statutory set-off as a defence to the claim, reducing or eliminating their liability to repay what would otherwise be preference payments, on the basis that the liability for the unfair preference payment formed part of a running account between the creditor and the company.

In Short

The Situation: The High Court of Australia has confirmed in Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2 that the "peak indebtedness rule" is no longer available to liquidators when assessing the value of running accounts in unfair preference claims.

Amidst the cost of living crisis, businesses are folding in record numbers, with barely a week passing without news of a big company casualty. Paperchase is the latest retailer to collapse into administration, with the business being snapped up by Tesco for sale in its superstores and 820 jobs reportedly at risk. So how can we identify the businesses that are in the danger zone and could be heading for insolvency?

1. Profit warnings

In Short

The Situation: Insolvency officeholders increasingly find their investigations into a company's affairs frustrated by the comingling of records on a "group" server. Claims to privilege by other group entities (or even third parties) are then advanced as an obstacle to delivering company records to the officeholder, leading to expensive and logistically complex inspection and review processes that can be a burden on insolvent estates.

With rising insolvency rates, driven in particular by the number of creditors’ voluntary liquidations reaching record highs, the decision in the recent Court of Appeal case of PSV 1982 Limited v Langdon [2022] EWCA Civ 1319 serves as a timely reminder for directors of the personal risks involved in re-using the name of a liquidated company.

The High Court has held an original tenant and guarantor of a lease liable for unpaid sums due where the new tenant had compromised its liabilities under the lease pursuant to a restructuring plan under Part 26A of the Companies Act 2006 (CA 2006). Read on for our analysis of Oceanfill Limited v Nuffield Health Wellbeing Limited and Cannons Group Limited [2022] EWHC 2178 (Ch).

The lease and licence to assign

What effect will government proposals have on insurers, policyholders and other stakeholders?