We have prepared the following tips for businesses to guide them through the current circumstances. Urgent advice should be sought where cash flow problems are arising, or where contractual obligations may not be able to be met. The best protection is preparation.

Talk to the people you deal with

Check in with the people you do business with regularly. This will include:

Systems Building Services Group Ltd, Re [2020] EWHC 54 (Ch)

Liquidation is not a panacea for the relevance and application of directors' duties. A practical example of which involves a director of a company in insolvency procuring and agreeing to an off-market sale of a property to himself by a rogue IP at a price which he knew to be a significant undervalue.

The recently published Pension Schemes Bill provides for major extensions of the Pensions Regulator's powers, including the creation of new criminal offences which are very broad in scope and could potentially catch a wide range of people. Whilst the Bill is not set to become law this side of the general election, it seems likely that a future government will seek to enact the measures contained in the Bill, many of which are likely to command cross-party support. 

• The Court of Appeal has given guidance to insolvent companies about whether to commence an adjudication.
• There is an important distinction to be drawn between a company in a CVA and one in liquidation.
• Parties need to be careful when making general reservations to an adjudicator's jurisdiction.

What's it about?

Following our previous updates (Ebert Construction Receivership – What You Need to Know and Ebert Construction – Receivership and Liquidation), on 12 November 2018 the High Court ordered that the Receivers of Ebert Construction Ltd (in rec and liq) (Ebert) be appointed as the receivers

Garcia v Marex Financial Ltd [2018] EWCA Civ 1468

The Court of Appeal has for the first time applied the rule against reflective loss to claims by creditors. The rule had in the past only been used to prevent claims by shareholders against directors, where the losses claimed by the shareholders reflected those suffered by the company.

Introduction

Following our Initial Note, the receivers of Ebert Construction Ltd (Ebert) released their first report on 1 October 2018. Then, on 3 October 2018, Ebert put itself into liquidation, with the liquidators subsequently issuing their first report on 10 October 2018. These developments have provided further information about Ebert’s financial position and the insolvency process.

What is currently known?

On 31 July 2018 Ebert Construction Ltd (Ebert) was placed into receivership. John Fisk, Lara Bennett, and Richard Longman from PwC have been appointed receivers. The receivership was announced the following day.

Orexim Trading Limited v (1) Mahavir Port and Terminal Private Limited ("MPT") (2) Singmalloyd Marine (S) PTE Limited ("Singmalloyd") (3) Zen Shipping and Ports India Private Limited ("Zen") [2018]

In a decision that will be of particular interest to creditors and insolvency practitioners contemplating section 423 Insolvency Act claims against defendants based outside the EU, the Court of Appeal has refused a claimant permission to serve a claim out of the jurisdiction.

In Ziggurat (Claremont Place) LLP v HCC International Insurance Company plc [2017] EWHC 3286 (TCC) the court considered a claim under an amended ABI Model Form Guarantee Bond.

As a result of a bespoke clause the Contractor's insolvency was enough to trigger recovery under the Bond, but if a breach of contract was required, the Contractor was in breach of the contract by failing to pay the amount due to the Employer following insolvency.