Investor frauds never go away

Non-professional investors are often enticed by promises of high returns to place money into schemes that turn out to be scams. These schemes adopt many guises and forms. But do they ever change, and how likely are they to emerge as the expected post-Covid economic uncertainty takes effect? Head of Insolvency and Asset Recovery Alex Jay examines investor fraud and how the insolvency process can help victims recover some of their money.

Increases in fraud and insolvency predicted

Business interruption (BI) insurance protects businesses against loss suffered as a result of a slowdown or suspension of operations. This includes loss of profits, loan payments and certain expenditure, such as rent.

Alex Jay writes for Accountancy Daily on various scenarios for companies looking to restructure their office space in the wake of the pandemic and subsequent re-evaluation of the use of office space.

According to the Guinness Book of Records, one Mr Johnson George of India holds the world record for the most roles played by any actor in one film. He played 45 roles, including Gandhi, Leonardo Da Vinci and Jesus. Company directors don’t have quite as many roles, nor are they as lofty.

We discussed in the March 2020 edition of the Texas Bar Journal¹ the bankruptcy court ruling by Judge Craig A. Gargotta of San Antonio in In Re First River Energy LLC that oil and gas producers in Texas do not hold perfected security interests in oil and gas well proceeds, notwithstanding the Texas Legislature’s efforts to protect producers and royalty owners following the downturn in the 1980s. The Fifth Circuit recently reaffirmed Judge Gargotta’s decision.

”The Supreme Court has today handed down its judgment in R (on the application of KBR, Inc) (Appellant) v Director of the Serious Fraud Office (Respondent) [2021] UKSC 2, an important decision relating to the Serious Fraud Office’s powers to issue notices on foreign companies under section 2(3) of the Criminal Justice Act 1987. In this article, David Savage, Head of Financial Crime looks at the case, and what the ruling means for the SFO’s investigative powers.

Summary

This article sets out some reflections on the decision of the Supreme Court in Sevilleja v Marex Financial Limited [2020] UKSC 31 from July 2020 which clarifies the scope of the so-called ‘reflective loss’ rule. The first instance judgment raised some comment-worthy issues regarding the economic torts which were not the subject of any appeal.

The Court of Appeal has handed down judgment on two appeals to decide whether the appellants had standing to challenge the conduct of a trustee in bankruptcy (“the Bankruptcy Appeal”) and joint liquidators (“the Liquidation Appeal”) respectively (Brake and others v Lowes and others [2020] EWCA Civ 1491). In this article, Tim Symes, a partner in our Insolvency and Commercial Litigation teams, examines the Court of Appeal’s decision.

Secured lenders across the UK are unhappy with the government’s decision to push through a new law which could partly or fully wipe out their security in favour of HMRC debts in a liquidation or administration. In this article,  Tim Symes, a partner in our Insolvency and Commercial Litigation teams, considers the return of HMRC’s Crown preference.

The Corporate Insolvency and Governance Act 2020 (“CIGA”), which came into force on 26 June 2020, introduced a series of new “debtor friendly” procedures and measures to give companies the breathing space and tools required to maximize their chance of survival. The main insolvency related reforms in CIGA (which incorporates both permanent and temporary changes to the UK’s laws) include:

1. New moratorium to give companies breathing space from their creditors

2. Prohibition on termination of contracts for the supply of goods and services by reason of insolvency