This is the second in a series of articles on how the changes introduced by the 2024 JCT (Joint Contracts Tribunal) contracts will impact the practical administration of the JCT contractual mechanisms.

In this article, we look specifically at the insolvency related provisions in the 2024 Design and Build (D&B) contract and the 2024 Intermediate Building Contract with Contractor’s design (ICD) contract. We address the updates to the definition of insolvency, the impact of those changes for Employers and Contractors and the related knock-on impact to sub-contracts.

In a recent judgment¹, the High Court determined (contrary to the arguments of the affected secured creditor) that a debenture created a floating charge rather than a fixed charge over certain internet protocol (IP) addresses. Whilst elements of the decision are inevitably fact-specific, some broader lessons and reminders can be taken from the judgment which will be of general relevance to lenders when taking security.

Introduction

Independent schools have not been immune from financial stress in recent years. Prior to the pandemic a combination of increasing staff costs, greater competition and the need for continual investment in technology and premises was already posing challenges for a number of institutions. This was exacerbated by the unique pressures of COVID, which saw income squeezed as a result of enforced school closures and reduced pupil numbers.

In a judgment that will be welcomed by insolvency professionals, the Supreme Court has today confirmed that administrators cannot be personally criminally liable for failing to notify the Secretary of State about plans for collective redundancies. This judgment follows an appeal by Robert Palmer against a finding that he was criminally liable for his failure to submit form HR1 in his capacity as the joint administrator of West Coast Capital (USC) Limited (USC).

What is the obligation?

This judgment reinforces the Court’s power to order a judgment debtor to draw down their pension for the benefit of the creditors as recently seen in Bacci v Green.

Summary

The recent judgment handed down by the High Court in Manolete v White [2023] EWHC 567 (Ch) reinforces the Court’s power to order a judgment debtor to exercise a right to draw down on their pension for the benefit of creditors as recently seen in Bacci v Green.

The Facts

Sova Capital Ltd (“Sova”) was an FCA authorised and regulated broker. Before it went into Special Administration, Sova provided investment brokerage services to institutional and corporate clients, mostly trading in the Russian market.

The war in Ukraine continues and the economic effect of sanctions against businesses that are connected to the Russian government are now being felt in earnest. Unsurprisingly, sanctions are becoming an increasingly hot topic for insolvency practitioners.

Recent months have seen the Courts hand down some important decisions, which provide helpful guidance on situations where the sanctions regime interfaces with insolvency processes. We have summarised three of the most significant in this article.

After depositors rushed to withdraw funds from Silicon Valley Bank (SVB), on Friday, March 10, 2023, the US bank was closed by the California Department of Financial Protection and Innovation (DFPI), and the Federal Deposit Insurance Corporation (FDIC) was named receiver of the closed bank.

Summary

In the recent Court of Appeal decision Bacci v Green [2022] EWCA Civ 1393 the Court, upholding the decision of the High Court, held that a judgment debtor can be ordered to delegate authority to waive valuable tax protection and draw pension where doing so would enable creditors to extract what they were owed.

The Facts

In 2017, Matthew Green, son of established Mayfair art dealer Richard Green, committed fraud in obtaining loans from FundingSecure.

On 28 October 2022, the High Court handed down judgment in the case of Alma Property Management Ltd v Crompton And Another [2022] EWHC 2671 (Ch).

In this case, the (freeholder) Claimant sought an order for specific performance of the (leaseholder) Defendants' repairing obligations under a lease of the common parts of a block of flats called North Tower in Manchester.