This month’s summary of “also ran” update items forms a fairly eclectic mix, however some useful items can be pulled out of them.
PPF guidance to Insolvency Practitioners onpre-pack
The recent decision in Brooks and Willetts (Joint Liquidators of Robin Hood Centre plc) v Armstrong and Walker [2015] EWHC 2289 sets out guidance on the burden of proof for directors in wrongful trading claims when seeking to establish that they have taken every step to minimise the potential loss to creditors. We explore the issues raised for practitioners.
The background to the case
The question of appropriate action in the face of directors’ duties to creditors in the pre-insolvency “twilight zone” is a perennial one. In particular, the question of preservation of asset value (given all the hoo- ha about pre-packs), and whether to transfer out assets before insolvency has an impact on value, is fraught with difficulty. Two recent cases offer contrasting versions of how to go about it.
Background – Re French UK plc
Recent weeks have seen a number of decisions concerning liquidations – in this article we explore three of the more interesting ones.
1) Overseas application of s.213 - Jetivia SA and another v Bilta (UK) Ltd (in liquidation) and others [2015] UKSC 23
The past three months have seen the publication of a spate of forthcoming regulatory and legislative changes. In this bulletin we investigate some of the more significant developments.
Insolvency Act 1986 (Amendment) Order 2015 – threshold for bankruptcy petitions
This order, which comes into effect on 1 October 2015, makes amendments to section 267(4) IA 1986, increasing the threshold for bankruptcy petitions to £5,000 (currently £750).
In Re DTEK Finance BV,1 the English High Court decided that a change in the governing law of bonds from New York to English law, established a sufficient connection with the English jurisdiction for it to sanction the bonds' restructuring via a UK scheme of arrangement.
Background
The Supreme Court (unanimously dismissing the appeal in Trustees of Olympic Airlines SA Pension &Life Assurance Scheme v Olympic Airlines SA) has held that “economic activity” is central to the definition of “establishment” in the Insolvency Regulation1.
Employees who transfer to a new employer from a business that is under insolvency proceedings may be able to recover unpaid wages and other debts from the Secretary of State.
However, BIS v Dobrucki has confirmed that the Secretary of State will only pick up the liabilities of the old employer (the transferor). It will not be responsible for liabilities that are incurred after the transfer has taken place; that is, any liability of the new employer (the transferee).
The background
The 18 March saw George Osborne’s budget speech, heralded by Mr Osborne announcing that “Britain is walking tall again” and promising to “use whatever additional resources we have to get the deficit and the debt falling”. We examine what the drivers behind the hyperbole might mean for the insolvency community.
Further austerity as the key theme
This quarter has seen a wave of legislative and regulatory reform on the way. We review some of the more significant developments.
Insolvency exemption to the Jackson reforms extended indefinitely