One of the most dramatic tools a lender can use in the collection of a loan is the involuntary bankruptcy case.  It is dramatic because of the implications for both the debtor and the lender who files the case.

On June 12, the United States Supreme Court in Clark v Rameker resolved the question that has recently split the 5th and 7th Circuits– Are inherited IRAs protected from the beneficiary’s creditors in a bankruptcy proceeding? The Court unanimously held that they are not.

Many schemes will see a sharp increase in their levy next year  as a result of the PPF’s new and more discriminative insolvency  scoring system.

To give you an idea, the PPF expects:

In 2012, the Fifth Circuit ruled in In re Chilton that inherited IRAs constituted retirement funds within the “plain meaning” of §522 of the Bankruptcy Code and were thus exempt from the bankruptcy estate, under § 522(d)(12) (the federal exemptions). See our prior discussion of this case here.

After Chilton, many thought the issue was settled.

Introduction

The Chancellor’s 2014 Budget speech revealed significant  changes to the way in which pension scheme members will be  able to access their savings. This move falls as just one of a raft  of changes to workplace pensions which Steve Webb MP has  described as a “pensions revolution”.

This update focusses on the recent Supreme Court decision in Re Lehman Brothers International (Europe) concerning the application of the “contributory rule” in administration and the admissibility and set-off of contingent claims in administration

Lehmans and the contributory rule

Preamble

Most if not all of our readers will be aware of a recent spate of decisions in which the English courts have been prepared to sanction schemes of arrangements (SofAs) for foreign entities having a “sufficient connection” with England and Wales. The latest decisions in Re Magyar Telecom B.V. (03/12/2013) show just how flexible the English courts can be in finding such a connection.

The background

This update focusses upon two recent High Court decisions dealing with (respectively) the ability of the court to retrospectively extend court-appointed receiverships, and the issue of whether COMI had shifted to England for a German national seeking bankruptcy here.

Extension of court-appointed receiverships

The case of Bank of Ireland v (1) Edeneast (2) Cosgrove and (3) Maguire (17/09/2013) concerned an application by the bank to retrospectively continue and extend the appointment of a courtappointed receiver.

This update focusses on a range of issues affecting IPs from the past two months, covering the consultation on fees announced in February, the HMRC announced changes to the VAT deregistration regime, when accountants may be required to produce documents under Sections 235 and 256 of the Insolvency Act, and a recent Court of Appeal decision on when a company may be considered to be insolvent for the purpose of Section 238 actions

Consultation on the regulation of Insolvency Practitioners and IPs’ fees

The English Court of Appeal decision in Caterpillar v John Holt & Company, and its analysis of “retention of title” and “no set-off” clauses, will be of interest to commodity traders, compliance officers and legal counsel in industries dealing with energy and natural resources internationally.