The Court of Appeal has recently considered whether an LPA Receiver owes a duty of care to a bankrupt mortgagor in connection with the way the Receiver deals with the mortgaged property. In a decision which will be welcomed by Receivers and their insurers, the court decided that a Receiver owes no such duties.

The facts

Earlier in April last year, we wrote an article on the insolvency exemption to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). Insolvency practitioners will be disappointed to hear that it has now been confirmed that the exemption will be lifted later this year.  

An update on recent changes

1 October 2015 – A day of changes to insolvency law

The start of October 2015 brought about important changes in insolvency law, affecting both creditors and debtors alike. The most notable changes are detailed below.

Harmonising office holder claims in administration  and  liquidation

The High Court has granted three insolvent Cayman companies (each in liquidation) a worldwide freezing order in support of proceedings against Mr Terrill, an individual who operated behind the companies' respective corporate directors as their sole director and shareholder.  The court exercised its discretion to grant the injunction despite there being a delay of more than a year between the discovery of suspicious transactions linked to Mr Terrill and a Letter of Request applying for a freezing order being sent by the Cayman court together with the companies' liquidators to the Englis

This month in Sharma v Top Brands Ltd [2015] EWCA Civ 1140 the Court of Appeal has again been asked to grapple with the question of when the illegality defence is available to defendants to actions brought by an insolvent company where the losses claimed are arguably tainted by the company's own fraudulent actions. In this instance the question for the court was whether the defence was available to a former liquidator of a company seeking to defend a claim brought against her for breach of duty under section 212 of the Insolvency Act 1986 (IA 1986).

Pre-Packs

The recent case of Oraki v Bramston and Defty [2015] EWHC 2046 (Ch) concerned former bankrupts' claims of professional negligence against their former trustees in bankruptcy (“the Trustees”). In dismissing the claims, the High Court held that the Trustees did not owe a common law duty of care to the bankrupts.

Patrick Hill and Declan Finn of DAC Beachcroft LLP, who acted on behalf of the successful Trustees, discuss the case and consider its implications for trustees in bankruptcy.

Background

Introduction

Several provisions of the Small Business Enterprise and Employment Act 2015, which will come into force on 1 October 2015, are likely to have an impact on directors and their D&O insurers. The first key change is that administrators and liquidators will be able to assign insolvency claims, such as claims for wrongful trading, fraudulent trading and transactions at an undervalue, to third parties.

The UK Insolvency Service has powers to investigate directors' conduct, to commence directors' disqualification proceedings and to enter into disqualification undertakings.