On 11 October 2016, the High Court10 held that statutory interest payable on an insolvency (under rule 2.88(7) IR 1986) is not “yearly interest” for UK tax purposes. Such statutory interest is therefore not subject to UK withholding tax (20%).

The facts of the case are somewhat unusual in that there was a substantial surplus in the administration and the statutory interest was estimated at £5bn. However the decision is a welcome clarification of the position. It also confirms HMRC’s previous guidance on the taxation of statutory interest (subsequently withdrawn).

On 29 November 2016, the First-tier Tribunal9 held that the issue of growth shares to certain key employees had inadvertently caused an existing class of ordinary shares to carry a preferential right to assets on a winding up. The effect of this was that both prior ordinary share issues, and future share issues, failed to meet the requirement of the Enterprise Investment Scheme (EIS) rules.

(6th Cir. B.A.P. Jan. 17, 2017)

(Bankr. W.D. Ky. Jan. 17, 2017)

The bankruptcy court grants the creditor’s motion for sanctions, and awards the creditor her attorney fees. The debtor filed the Chapter 13 petition for the stated purpose of obtaining more time to obtain a reduction in his maintenance obligation owed to the creditor in the state court. The bankruptcy court finds that this was a violation of Bankruptcy Rule 9011(b). Opinion below.

Judge: Lloyd

Attorney for Debtor: Naber & Joyner, J. Gregory Joyner

Attorney for Creditor: Joseph S. Elder II

(Bankr. E.D. Ky. Jan. 6, 2017)

(Bankr. E.D. Ky. Jan. 6, 2017)

The bankruptcy court overrules the creditor’s objection to confirmation of the Chapter 13 plan. The creditor argued its claim, secured by the debtors’ mobile home, should be increased by the cost of delivery and set-up of the home. The court holds that set-up and delivery costs may not be used as a means to increase the replacement value as a matter of law. Opinion below.

Judge: Wise

Attorney for Debtor: Daryle M. Ronning

Attorneys for Creditor: McBrayer, McGinnis, Leslie & Kirkland, Zachary A. Horn

(6th Cir. B.A.P. Jan. 4, 2017)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s decision and order denying the trustee’s request for turnover of funds paid to the debtor’s criminal defense attorney. The debtor’s mother had made the transfer from a bank account held jointly with the debtor. The trustee failed to meet the burden of proving by a preponderance of the evidence that the attorney fee was property of the estate, and thus turnover was inappropriate. Because the debtor had no claim to the fee, the trustee had no claim for turnover. Opinion below.

(7th Cir. Dec. 22, 2016)

(Bankr. E.D. Ky. Dec. 27, 2016)

The bankruptcy court dismisses the creditor’s non-dischargeability complaint under 11 U.S.C. § 523(a)(2)(A) and (a)(6). The creditor conceded that the debt was based on a breach of contract claim. However, the creditor alleged the debt was converted to a non-dischargeable debt based on the debtor’s post-judgment efforts to avoid collection. The court finds that the creditor failed to state a claim in part because the alleged behavior did not result in the debt sought to be declared non-dischargeable. Opinion below.

Judge: Schaaf

(N.D. Ind. Dec. 22, 2016)

The district court affirms the bankruptcy court’s order lifting the stay to permit the creditor to proceed with the real property foreclosure action. The debtor failed to provide factual or legal support for his claims of fraud by the creditor. Opinion below.

Judge: Miller

Plaintiff: Pro Se

Attorneys for Defendants: Dykema Gossett PLLC, Jordan S. Huttenlocker, Louis S. Chronowski