This article provides an essential update for insolvency practitioners on the proposed Insolvency Rules 2015 and the end of the insolvency exemption on Conditional Fee Agreements.

The end of the CFA?

At the end of October the Pension Protection Fund announced that it had come to an agreement with Monarch Airlines and the Pensions Regulator to accept the Monarch Airlines Limited Retirement Benefit Scheme into a PPF assessment period. The agreement, reached after discussions between the parties and the Trustees of the Scheme will enable the airline to restructure its business and accept £125m in new capital and liquidity facilities from Greybull Capital LLP in return for a 90 per cent shareholding.

New legislation came in to force on 21 July 2014 with the intention of granting entry to the Pension Protection Fund (the “PPF”) for those members of the Olympic Airlines SA Pension and Life Assurance Scheme (the “Scheme”). The members of the Scheme had previously been denied entry as a result of a Court of Appeal decision in the case of the Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA.

Most Landlords, and Insolvency Practitioners (“IP”s), will be well aware of the issues and liabilities that can arise where a tenant (whether it be a company or individual, residential or commercial) experiences financial difficulties. Competing interests can lead to difficulties for all parties and, potentially, legal disputes.

Since the Welfare Reform and Pensions Act 1999 (“1999 Act”), it has been understood that the rights of a bankrupt under a tax approved pension plan are excluded from the bankruptcy estate and do not vest in his Trustee in Bankruptcy.

That said, where a Bankrupt was already drawing an income from his pension, his Trustee could seek an Income Payments Order over that income.

The Insolvency Rules 1986 (“IR 1986”) are to be replaced in their entirety by the Insolvency Rules 2015 (“IR 2015”).

The Insolvency Service has been running a long-standing ‘modernisation’ project to consolidate the 23 amending instruments to IR 1986 and provide a number of substantive amendments to existing insolvency law and practice. 

Unlike real estate transactions where a lender can obtain title insurance, secured lenders are often relying upon the representations and warranties in their loan agreement and the borrower’s audited financial statements, if and when determining whether the collateral securing their loans is owned by the borrower or another pledgor.  After default, a lender may find itself in a precarious position whereby it is unable to foreclose on the collateral because it is not owned by its borrower and it does not have a pledge from the person that actually does own the property.  According

The Court of Appeal has handed down an important judgment for landlords and insolvency practitioners, in the case of Jervis v Pillar Denton; re Games Station (“Game”).

Since the financial crisis, sales under Section 363 of the Bankruptcy Code have provided an increasingly popular way for secured creditors of distressed businesses to recover their loans.  However, despite the advantages of Section 363 sales, the significant expense and time required to conduct a Bankruptcy sale has caused secured creditors to pursue less comprehensive solutions.  One alternative for recouping value from a troubled loan is an Article 9 foreclosure sale under the Uniform Commercial Code (UCC).

A June 2013 decision from the United States Bankruptcy Court for the Eastern District of North Carolina Greenville Division, In re L.L. Murphrey Company, 2013 WL 2451368 (Bankr. E.D.N.C. June 6, 2013), highlights the importance of due diligence in connection with assignments of security interests.