This article was first published in Practical Law.
With the long-awaited decision of the Court of Appeal in Horton v Henry, the Looking Glass decision in Raithatha v Williamson is finally laid to rest.
1. Introduction
The Insolvency Rules 2016 (“the 2016 Rules”) were published and laid before parliament on 25 October 2016. The rules will come in to force on 6 April 2017. The following note summarises the key features of the rules. For further detail the reader is referred to the following sources:
Imagine you are the CEO of company sitting across from an interviewer. The interviewer asks you the age old question, “So tell me about your company’s strengths and weaknesses?” You start thinking about your competitive advantages that distinguish you from competitors. You decide to talk about how you know your customers better than the competition, including who they are, what they need, and how your products and services fit their needs and desires. The interviewer, being somewhat cynical, asks “Aren’t you worried about the liabilities involved with collecting all that data?”
A recent opinion issued by the United States District Court for the Northern District of Illinois reminds us that corporate veil-piercing liability is not exclusive to shareholders. Anyone who is in control of and misuses the corporate structure can be found liable for the obligations of the corporation. The facts of this case, however, did not support personal liability for veil-piecing.
Finally a decision on whether a bankrupt can be compelled to draw down a pension: The Court of Appeal has finally handed down its long-awaited judgment in Horton v Henry [2016] EWCA Civ. 989, the case determining whether a Trustee in Bankruptcy can compel a Bankrupt to draw down his pension even though the pension is not in payment because the Bankrupt has elected not to call it down.
Original news
Goldcrest Distribution Limited v McCole and others [2016] EWHC 1571 (Ch)
What is the background to this case?
The claimant lender, C, sought possession of residential property owned jointly by D1 and his partner D2 (the property) pursuant to a purported legal charge entered into by both the D1 and D2 (the charge). The charge secured D1’s liability to C arising under a guarantee whereby D1 had guaranteed the indebtedness of his company, "Ascot" to C.
A version of this article was first published in The Law Society Gazette and Prime Resi.
In an earlier blog piece we reported on the Third Circuit’s 2015 decision in In re Jevic Holding Corp. where the Court approved a settlement, implemented through a structured dismissal, which allowed junior creditors to receive a distribution prior to senior creditors being paid in full.
Facts
Longmeade went into compulsory liquidation. The liquidators were advised that the company had a good claim against BIS. The liquidators has secured third party funding in respect of the claim, which if successful, would double the dividend for creditors. However, 99% by value of the creditors of the company opposed the commencement of an action against BIS. The position of the few remaining creditors was unclear. The liquidators applied to the court for directions as to whether to cause the Longmeade to pursue the claim.
Held
Facts
The company (‘Goldtrail’) was a tour operator. The director, who owned 100% of the company, had attempted to sell 50% of his shares to each of two companies without one knowing about the other. Goldtrail went into liquidation leaving passengers stranded overseas and owing £20m for repatriation.