In the English High Court, the joint administrators of four English companies within the former Lehman Brothers group sought directions from the Court in respect of a proposed settlement. The settlement would put to rest substantial inter-company claims including those at issue in the 'Waterfall III' proceedings.

In a second application heard on the same day, Hildyard J considered an application by the administrators of Lehman Brothers Europe Limited (LBEL) for directions that would enable a surplus to be distributed to the sole member of LBEL while LBEL remained in administration. The proposed scheme had material benefits for both shareholders and creditors. The administrators acknowledged that the orders sought were an indirect means of circumventing the Insolvency Act 1986 (UK), which does not expressly provide for directors to make distributions during an administration.

SAW (SW) 2010 Ltd & Anor v Wilson & Ors [2017] EWCA Cif 1001 (25 July 2017)

The Court of Appeal has held that the validity of a floating charge (and the appointment of joint administrators under that floating charge pursuant to paragraph 14 of Schedule B1 to the Insolvency Act 1986) does not depend on the existence of uncharged assets of the company at the time of its creation, nor upon the power of the company to acquire assets in the future.

BACKGROUND

Randhawa & Anor v Turpin & Anor [2017] EWCA Civ 1201

In a fascinating (and very readable) judgment, the Court of Appeal has held the appointment of joint administrators made under paragraph 22 of Schedule B1 to the Insolvency Act 1986 ("IA 1986") to be invalid because, among other things, the appointment was made following an inquourate board meeting. Readers are encouraged to read the judgment, as the following is merely an overview of the facts and conclusions.

BACKGROUND

The Court of Appeal has recently dismissed an appeal from the High Court's judgment (discussed in our September 2016 update) setting aside a compromise under Part 14 of the Companies Act 1993 after finding that the challenging creditors, who had voted against the compromise, had been unfairly prejudiced by the decision to call only one meeting of creditors.

In McIntosh v Fisk [2017] NZSC 78, the New Zealand Supreme Court had to consider whether the liquidators of a Ponzi scheme were entitled to recover from an investor a payment that the investor had received shortly before the appointment of the liquidators.

The case of Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2017] EWHC 257 (Ch) concerned the liability of a stockbroking company for failing to investigate fraudulent transactions. 

In Akers & Ors v Samba Financial Group (Rev 1) [2017] UKSC 6, the UK Supreme Court confirmed that British insolvency officers can only void dispositions of a company's assets held on trust in certain circumstances. 

The Supreme Court in McIntosh v Fisk upheld the Court of Appeal decision permitting the liquidators of Ross Asset Management Ltd (RAM) to claw back the fictitious profits paid out to Mr McIntosh.  However the claw back did not apply to the original investment of $500,000.

The majority found that McIntosh had a defence for the $500,000 as he had provided "real and substantial valuable consideration".  Once RAM misappropriated the $500,000 it became indebted to McIntosh for that amount, this equated to the provision of valuable consideration.

This question arose in Queensland recently in Linc Energy Ltd (in liq): Longley & Ors v Chief Executive Dept of Environment & Heritage Protection.  The Supreme Court of Queensland found that the liquidators of Linc Energy were not justified in causing the company not to comply with an environmental protection order that required the company to maintain equipment that the liquidators had disclaimed.