In its ministerial statement this week in relation to its consultation on the proposals for a restructuring moratorium, the Government has indicated that it now proposes to consider implementing measures to tackle the unreasonable use of termination clauses in insolvencies.

What Are Termination Clauses?

Termination clauses are, of course, found in most commercial agreements and are a means by which a party may terminate an agreement on the occurrence of certain events (invariably including insolvency of the other party).

In the recent English Court of Appeal case of Rubin v Coote, the court allowed a liquidator to settle litigation without having obtained the agreement of all creditors to the compromise.

The Facts

The Court of Chancery of Delaware ruled that counsel failed to establish "excusable neglect" when it requested additional time to submit an expert witness report after the deadline for that report—as provided for in the court's previously issued scheduling order—had expired.

The recent Court of Session case of Tayplan Limited (in administration) v Smith, is particularly interesting as it is a case where the administrator chose to pursue directors for breach of fiduciary duties rather than using any of the more common statutory remedies.

The Facts

Tayplan Limited was a family business with two directors - Mr Smith senior and Mr Smith junior. Mr Smith senior and his wife each held 50% of the shares in the Company.

Reversing a controversial decision and judgment of the bankruptcy court, the United States District Court for the Southern District of Florida has held that a group of lenders who received payment in settlement of their defaulted debt from the proceeds of new loans secured by the assets of certain subsidiaries of TOUSA, Inc. which were not themselves liable on that debt, did not receive fraudulent transfers.

The Insolvency Service ("IS") has published a consultation on proposed reform to the regulation of insolvency practitioners. The consultation responds to various recommendations made last year by the Office of Fair Trading ("OFT") in their study entitled, "The Market for Corporate Insolvency Practitioners".

Section 75 of the Pensions Act 1995 has the potential to mean that, as a result of corporate restructuring (including on employee and TUPE transfers), an employer that participates in a defined benefit occupational pension scheme could have to make a one-off payment (a debt) to the scheme. The debt reflects the difference between the scheme funds that are available and the estimated cost of securing all scheme benefits in the form of annuity policies.

In a decision that demonstrates a considerable degree of common sense, Lord Glennie has confirmed that in certain liquidations one can dispense with the usual requirement for a Reporter to be appointed to consider a liquidator's accounts. The decision forms part of an Opinion issued by Lord Glennie in relation to the winding-up of Park Gardens Investments Limited ("the Company").

The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) voted on December 18 to approve an interim final rule clarifying how the agency will treat certain creditor claims under the new orderly liquidation authority established under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Since 2003, the procedure for appointing administrators has largely consisted of filing simple forms with a court. What could be easier? A recent case has, however, highlighted the dangers of making errors in the filing process and serves as a timely warning to everyone involved in insolvency and security enforcement work.

In Kaupthing Capital Partners II Master LP Inc, the English courts ruled that an appointment of administrators was invalid as the incorrect form had been used for the appointment.