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".

Bankruptcy Judge Michael Lynn of the Northern District of Texas recently issued a noteworthy opinion in In re Village at Camp Bowie I, L.P. that addresses two important Chapter 11 confirmation issues. Judge Lynn determined that a plan that artificially impaired a class of claims in order to meet the requirements of section 1129(a)(10) had not been proposed in bad faith and did not violate the requirements of section 1129(a). In his ruling, Judge Lynn also applied the Supreme Court’s cram-down “interest”1 rate teachings in Till v.

As many creditors have unfortunately discovered, the Bankruptcy Code allows a debtor to sue the creditor for certain payments – called preferences – that the creditor received from the debtor prior to the bankruptcy.

On June 28, 2011, in In re Enron Creditors Recovery Corp. v. Alfa,1 the Second Circuit Court of Appeals held that Enron’s redemption of its commercial paper prior to maturity fell within the definition of a “settlement payment” and was protected from avoidance under § 546(e)’s safe harbor provision in Title 11 of the United States Code.2

On June 23, 2011, the Supreme Court handed down a 5-4 decision in the Stern v.

As reported in our recent e-update on the case of Echelon Wealth Management Limited (in liquidation), Lord Glennie has determined that liquidators who are removed from office have no right to retain assets as security for remuneration and costs.  Lord Glennie then went on to consider how the court, in determining the level of a liquidator’s remuneration, should view the conduct of the liquidator. 

In a recent case in relation to the liquidation of Echelon Wealth Management Limited ("E"), Lord Glennie has decided that upon removal as liquidator, a former liquidator may not retain from the assets of the liquidated company any sum as security for costs.

The Facts

S&C were appointed joint liquidators of E at a creditors meeting on 16 December 2008. At a creditors meeting on 22 July 2009, they were then removed from office with new joint liquidators being appointed.