The Tribunal has upheld HMRC's decision that a company (Danesmoor Ltd) should not be entitled to recover input VAT incurred on professional fees for a corporate restructuring. HMRC had not allowed the recovery of the input VAT on the grounds that the services were not provided to the company. The appellant argued that the advisors had been engaged and paid for by the company directly in connection with the restructuring and as such the input VAT should be recoverable.

On Jan. 21, in Official Committee of Unsecured Creditors of Motors Liquidation v. JPMorgan Chase Bank (In re Motors Liquidation), No. 13-2187, (2d Cir. Jan. 21, 2015), the U.S. Court of Appeals for the Second Circuit addressed whether a UCC-3 termination statement, which was improperly filed as part of the repayment of an unrelated loan, may be considered effective to terminate the security interest in question, even where none of the parties intended that result.

Recent weeks have seen a number of decisions concerning liquidations – in this article we explore three of the more interesting ones.

1)  Overseas application of s.213 - Jetivia SA and another v Bilta (UK) Ltd (in liquidation) and others [2015] UKSC 23

The past three months have seen the publication of a spate of forthcoming regulatory and legislative changes. In this bulletin we investigate some of the more significant developments.

Insolvency Act 1986 (Amendment) Order 2015 – threshold for bankruptcy petitions

This order, which comes into effect on 1 October 2015, makes amendments to section 267(4) IA 1986, increasing the threshold for bankruptcy petitions to £5,000 (currently £750).

Section 303 of the Bankruptcy Code provides creditors with a mechanism to force a recalcitrant debtor into bankruptcy through the filing of an involuntary petition for relief. Pursuant to this section, an involuntary bankruptcy case may be commenced only under Chapter 7 or 11 of the Bankruptcy Code, and may only be brought against a person otherwise qualified to file a voluntary petition. Where the purported debtor has fewer than 12 creditors, the involuntary petition need only be filed by a single creditor.

The world may end in fire and ice but, at least for now, it will not end in the bankruptcy court.[1]

The Supreme Court has confirmed in Jetivia v Bilta that where a company brings a claim against its directors for losses caused by their wrongdoing, the directors cannot escape the claim by arguing that their actions are attributed to the company itself.

The Supreme Court also held that s.213 of the Insolvency Act, (which permits the Court to take action against those who  have conducted the business of a company in order to defraud creditors) was not jurisdictionally confined and applied to people and companies resident outside the UK.

In a case of first impression in Texas, the United States Bankruptcy Court for the Southern District of Texas held that the former majority member of a chapter 11 LLC debtor had to relinquish control of the LLC's Facebook page and Twitter account because they were property of the LLC's bankruptcy estate. In re CTLI, LLC, Case No. 14-33564, 2015 WL 1588085 (Bankr. S.D. Tex. April 3, 2015). CTLI, LLC was a Texas gun store and shooting range doing business as Tactical Firearms.

Under the Bankruptcy Code, a debtor in possession operates its business “as usual” during the pendency of a case. Likewise, in most cases, prepetition corporate governance practices and procedures should continue post-petition. In fact, as Judge Sontchi recently held in In re SS Body Armor I, Inc., Case No. 10-1125(CSS) (Bankr. D. Del. April 1, 2015), the right of a shareholder to compel a shareholders’ meeting for the purpose of electing a new board of directors continues during bankruptcy.  Absent “clear abuse,” the automatic stay of 11 U.S.C.

Employees who transfer to a new employer from a business that is under insolvency proceedings may be able to recover unpaid wages and other debts from the Secretary of State.

However, BIS v Dobrucki has confirmed that the Secretary of State will only pick up the liabilities of the old employer (the transferor).  It will not be responsible for liabilities that are incurred after the transfer has taken place; that is, any liability of the new employer (the transferee).

The background