After a period of significant inactivity as a result of the various temporary measures introduced during the pandemic, we are now approaching an insolvency cliff edge in the UK. In this video, senior restructuring and insolvency lawyers from TLT’s Scottish, Northern Irish and English offices discuss:
What is it and what has changed?
Wrongful trading is a term that has received quite a bit of press over the last few months, mainly through the headlines generated by the UK Government’s unprecedented amendment to the wrongful trading provisions contained within our insolvency legislation.
But what exactly is wrongful trading and what has changed?
In Martin v McLaren Construction Ltd [2019 EWHC 2059 (Ch) the Court was asked to decide whether the Respondent had issued a valid Demand Letter against the Applicant prior to issuing a Statutory Demand, and even if it had not, whether the Court should still exercise its discretion to uphold the Statutory Demand pursuant to Rule 10.5(5) of the Insolvency (England and Wales) Rules 2016.
(Bankr. S.D. Ind. Dec. 4, 2017)
The bankruptcy court grants the motion to dismiss, finding the defendant’s security interest in the debtor’s assets, including its inventory, has priority over the plaintiff’s reclamation rights. The plaintiff sold goods to the debtor up to the petition date and sought either return of the goods delivered within the reclamation period or recovery of the proceeds from the sale of such goods. Pursuant to 11 U.S.C. § 546(c), the Court finds the reclamation rights are subordinate and the complaint should be dismissed. Opinion below.
(Bankr. E.D. Ky. Nov. 22, 2017)
(B.A.P. 6th Cir. Nov. 28, 2017)
The Sixth Circuit B.A.P. affirms the bankruptcy court’s dismissal of the Chapter 12 bankruptcy case. The court finds that the bankruptcy court failed to give the debtor proper notice and opportunity to be heard prior to the dismissal. However, the violation of due process was harmless error. The delay in filing a confirmable plan and continuing loss to the estate warranted the dismissal. Opinion below.
Judge: Preston
Attorney for Appellant: Heather McKeever
(6th Cir. Nov. 14, 2017)
(Bankr. W.D. Ky. Nov. 1, 2017)
The bankruptcy court grants the creditor’s motion for stay relief to proceed with a state court foreclosure action. The creditor had obtained an order granting stay relief in a prior bankruptcy filed by the debtor’s son, the owner of the property. The debtor’s life estate interest in the property does not prevent the foreclosure action from proceeding. Opinion below.
Judge: Lloyd
Attorney for Debtor: Mark H. Flener
Attorney for Creditor: Bradley S. Salyer
The Sixth Circuit affirms the B.A.P., holding the entry of summary judgment in favor of the creditors in the nondischargeability action was appropriate. The creditors obtained a default judgment against the debtor in Tennessee state court. The default judgment was on the merits and the doctrine of collateral estoppel applied. Opinion below.
Judge: Rogers
Appellant: Pro Se
Attorneys for Creditors: Keating, Muething & Klekamp, Joseph E. Lehnert, Brian P. Muething, Jason V. Stitt
(Bankr. E.D. Ky. Nov. 1, 2011)