In Stojkov v Kamal [2015] NZHC 2513 a creditor, Mr Stokjov, gave notice to the appointed liquidator, Mr Kamal, for a meeting of creditors to be called.  Mr Kamal did not call the meeting and maintained that the notice was given out of time.  Mr Stokjov reasonably pointed out that this was plainly incorrect.  Mr Kamal, despite clearly being in breach of his duty, still refused to call the meeting and later claimed (quite irrelevantly) that the cost of the meeting was not justified.

Sanson v Ebert Construction Limited [2015] NZHC 2402 concerned the successful application by liquidators to set aside payments made pursuant to a direct deed arrangement, as they were payments made on behalf of the insolvent developer. Sanson was the first New Zealand case where a liquidator has raised this argument but it is unlikely to be the last.  Direct deeds are a common contractual tool in construction projects to give financiers the right to step into the place of the developer and directly arrange for payments to the contractor to ensure that t

In King v PFL Finance Limited & Anor [2015] NZCA 517, the Kings, a husband and wife team of farmers, arranged finance from PFL Finance Limited but the loan went into default.  PFL served PLA notices but failed to serve the Kings as guarantors.  A receiver was appointed to the farming operation, who determined to cease trading the day after his appointment.

In Purewal v Countrywide Residential Lettings Ltd [2015] EWCA Civ 1122, the receivers of a property did not make an insurance claim in relation to damage to the property.  The mortgagor of the property (a bankrupt) repaired the property himself.  He brought an action against the receivers for breach of duty by failing to make an insurance claim, claiming damages for the cost of the repairs.

Nearly three years after the High Court decision on the case of BNY Corporate Trustee Services Ltd v Eurosail UK 2007 – 3BL PLC and others was handed down, the case has run its course in the Supreme Court. The case, which considers the correct interpretation of the balance-sheet insolvency test in section 123(2) of the Insolvency Act 1986, is of importance to insolvency practitioners, financial institutions, legal advisers, company directors and companies.  

Court of Appeal decision  

BNY Corporate Trustee Services Limited v Eurosail-UK 2007-3BL Plc & others [2011] EWCA Civ 227

The Court of Appeal has allowed companies around the country to breathe a solvent sigh of relief, as it has held that the so-called “balance sheet” test of insolvency in s123(2) Insolvency Act 1996 is intended to apply where a company has reached a “point of no return” rather than being used as a “mechanistic, even artificial, reason for permitting a creditor to present a petition to wind up a company”.  

Release provisions

The scope of the powers afforded to the security agent by the so called “release provisions” found in many intercreditor agreements employed in LBO deals has come under scrutiny recently. A number of restructurings have relied upon using the security agent’s powers to implement a restructuring and many others will have at least considered using them.

Summary

The joint administrators of Lehman Brothers International (Europe) (“LBIE”) have released their second statutory six month progress report for the period 15 March 2008 to 14 September 2009 (the “Report”).

A full copy of the Report is attached, which includes detail about the positions realised and expenses to date. Key points of interest are as follows: