New criteria set out by the Bank of Spain will have a binding nature for supervised financial entities
Introduction
On 30 April 2013 the supervisory body of the Bank of Spain sent a formal communication to the financial entities subject to its supervision containing the criteria to be used with regard to the definition, documentation, follow-up and review of credit refinancing and restructuring transactions (the Communication).
OSCR report issued following investigation of benefits to employee on wind-up
Lazari GP Ltd v Jervis
When a company goes into administration, it benefits from a "moratorium" that prevents creditors taking legal and other proceedings against the company or its assets. The main purpose of the moratorium is to free an administrator's rescue attempts from the distractions of legal action from creditors.
The recent flurry of news reports regarding the administration of high street retail chains and the subsequent sale of parts of their businesses is perhaps an opportune time to flag up the renewed importance that the hypothec plays in Scottish property law.
By virtue of the hypothec, in insolvency, a landlord automatically obtains a fixed charge ranking on the proceeds of sale of the moveable goods of the tenant that are on the premises as at the point of insolvency, up to the value of any arrears of rent.
Agreements with administrators often contain provisions to the effect that any claim against the company in administration will rank only as an unsecured claim and not as an expense of the administration. Although such provisions are common, there has always been some doubt as to their efficacy.
In line with the trend of the first reform to the Spanish Insolvency Act of 2003 carried out on March 2009 (the 2009 Reform), new amendments to the Spanish Insolvency Act (the SIA) were approved on 4 October 2011 (the Amendment). This Amendment will enter into force on 1 January 2012.
Recently, the Court of Appeal upheld the High Court's decision in the Nortel Networks and Lehman Brothers disputes. The judgment confirms that liabilities under Financial Support Directions (FSDs) and Contribution Notices (CNs), which are issued by the Pensions Regulator, will rank ahead of almost all other claims when a company becomes insolvent. The discussions in the case focused on whether FSDs and CNs are classed as 'provable debts', expenses of the insolvency or, indeed, neither.
In Finnerty v Clark, the Court of Appeal has given guidance on what constitutes "good and sufficient" grounds for the removal of administrators. In this case, shareholders of a company in administration were also substantial creditors of the company. They wished the administrators to raise proceedings under Section 244 of the Insolvency Act 1986 (extortionate credit transactions) to challenge loan agreements that had been entered into by the company prior to administration.
The recent case of Stephen Petitioner offers some clarification regarding issues relating to the validity of appointment of administrators.
The Facts
Sections 216 and 217 of the Insolvency Act impose draconian sanctions on directors of liquidated companies who reuse "prohibited names". Prohibited names are names that are identical to, or "suggest an association with", a company that has gone into liquidation and of which they were previously directors. The sanctions include criminal penalties and personal liability for debts. It has always been difficult for advisers to confidently advise directors whether a proposed name for a new company would be a prohibited name, given the vague nature of the phrase "suggest an association".