A fundamental consideration when embarking on any litigation is whether the defendant will be able to pay. In most cases, this is really a question of whether the defendant is insured (although in some cases a defendant may be uninsured and yet still have the means to pay).
What happens if the defendant is insolvent?
On 1 October 2017, the Pre-Action Protocol for Debt Claims (Protocol) will come into force. It will apply to all debt claims where:
- the creditor is a business (including sole traders and public bodies)
- the debtor is an individual (including sole traders), and
- no other specialised Protocol applies.
Why is this new Protocol being introduced?
The express purpose of the new Protocol is to:
The Bottom Line
Breyer Group Plc v RBK Engineering Ltd
The High Court's recent judgment in Breyer Group Plc v RBK Engineering Limited [2017] EWHC 1206 provides a timely reminder for parties to construction contracts of the appropriate (and inappropriate) uses of winding-up petitions.
The case concerned a successful application made by Breyer Group PLC (Breyer) for an order preventing RBK Engineering Limited (RBK) from continuing with a petition to wind up Breyer on the basis of a disputed debt.
How did the dispute arise?
In summary:
The Bottom Line
This article provides a brief overview of the somewhat related doctrines of setoff and recoupment in the Chapter 11 context. Setoff is recognized in the Bankruptcy Code to offset the claims of creditors and the debtor in a bankruptcy proceeding. Recoupment is a common law doctrine of similar effect. Sometimes overlooked by debtors and creditors alike, these doctrines can be of critical consequence in the settling of accounts between a creditor and the bankrupt debtor.
Setoff
The IRS announced in July that it has withdrawn proposed regulations (the net value regulations) that provided guidance regarding corporate formations, reorganizations and liquidations of insolvent corporations. Those regulations, which were proposed in 2005, required the exchange (or, in the case of the liquidation of a subsidiary into its parent, the distribution) of “net value” in order for the transaction to qualify for nonrecognition treatment under the Internal Revenue Code (the Code).
The Net Value Regulations
Net Value in 332 Liquidations
The Bottom Line:
In Randhawa and Randhawa v Turpin and Hardy [2017] the Court of Appeal considered the comparatively simple question of whether the sole director of a company with articles that required two directors for a board meeting to be quorate, could validly appoint administrators under paragraph 22(2) of Schedule B1 to the Insolvency Act 1986 (paragraph 22(2)). The complicating feature was that, whilst 75% of the shares in the company were held by the sole director, the remaining 25% were registered in the name of a long-dissolved Manx company.
Background