Historically, HMRC has allowed insolvency practitioners to, at an early stage following their
appointment, cancel the VAT registration of the insolvent business. Practitioners have then been
entitled to account for VAT on any subsequent supplies using HMRC’s form VAT 833 (Statement of
Value Added Tax on goods sold in satisfaction of a debt).
In Bailey & Others (Joint Liquidators of D&D Wines International Limited) v Angove’s Pty Limited1, the Court of Appeal overturned a decision of the High Court, and so permitted the liquidator of an insolvent agent to recover funds due to it from end-customers despite the agency having been terminated.
Background
In a recent decision that has captured the attention of the U.S. secondary loan market, the United States District Court for the Western District of Washington starkly concluded that hedge funds “that acquire distressed debt and engage in predatory lending” were not eligible buyers of a loan under a loan agreement because they were not “financial institutions” within the Court’s understanding of the phrase.
The High Court (David Donaldson QC) has held in Enta Technologies Limited v HMRC [2014] EWHC 548 (Ch), that where a winding-up petition was brought by HMRC based on the non-payment of tax raised in assessments and the taxpayer's appeal against those assessments was pending, the winding-up court should refuse to adjudicate on the merits of the appeal and should leave that question to be dealt with by the First-tier Tribunal (Tax Chamber) ('FTT').
Background
The recent Court of Appeal decision in Rawlinson and Hunter Trustees SA & others v Akers & another [2014] serves to emphasise that third party reports commissioned by liquidators to enable them to consider whether litigation should be commenced in order to make recoveries for the benefit of creditors will not always attract litigation privilege.
In its decision on the Game Station1 appeal, the Court of Appeal has overturned the cases of Goldacre2 and Luminar3 holding that office holders of insolvent companies must pay rent of property occupied for the benefit of creditors on a “pay as you go” basis irrespective of when rent falls due under the lease.
The facts
A recent decision in the bankruptcy case of Fisker Automotive Holdings, Inc., et al. has called into question a long-held belief that secured creditors hold dear: that debt purchased at a discount can nonetheless be credit bid at its full face amount at a collateral sale. While it remains to be seen how other courts will interpret Fisker, this decision has the potential to restrict participation in Bankruptcy Code section 363 sales and dampen liquidity in the robust secondary markets.
Recently, in connection with the bankruptcy case of KB Toys, the Third Circuit Court of Appeals disallowed a claim held by a claim purchaser, citing that the original holder of the claim had received a preference payment prior to the bankruptcy case.1 The ruling affirmed an earlier decision of the Delaware Bankruptcy Court, which we discussed in a previous memorandum2, in which the Bankruptcy Court held that (i) a claim in the hands of a transferee has the same rights and disabilities as the claim had in the hands of the original claimant; and (ii) disabilities attach t
A party's right to terminate a contract in the event that the other party becomes insolvent is one of the most commonly seen termination rights in outsourcing and technology agreements. However, the effectiveness of such provisions in the future could change in agreements governing the provision of IT services, as the new Enterprise and Regulatory Reform Act 2013 gives the Government the power to extend the law that currently protects supplies of gas, water, electricity and communication services during an organisation's insolvency to the supply of IT services.