The decision in Adhesive Pro Pty Ltd v Blackrock Supplies Pty Ltd [2015] ACTSC 288 reinforces the strict rule that an application to set aside a statutory demand must be filed and served within 21 days of receiving the demand.

Statutory demands are a common and useful tool for many unsecured creditors seeking payment of a debt.  Non-compliance with a statutory demand results in a presumption of insolvency and the possibility that a creditor can apply to wind up a company debtor.

In Sharma v Top Brands Ltd [2015] EWCA Civ 1140, the Court of Appeal refused to allow a former liquidator of a company (which was a vehicle for VAT fraud) to rely on the illegality defence to avoid liability for a claim brought against her for breach of duty under section 212 of the Insolvency Act 1986 (IA 1986).

Background

The Insolvency Law Reform Bill 2015 has been introduced into Parliament as part of the Australian Government's strategy to modernise and strengthen the nation's insolvency and corporate reorganisation framework.

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

Freezing orders and the Foreign Judgments Act

Freezing orders (also known as Mareva orders or Mareva injunctions) are oft-used tools available to a plaintiff to preserve the assets of a defendant, where there is a danger of the defendant absconding or of the assets being removed from the jurisdiction or otherwise diminished. Such dangers put in peril the ability of a plaintiff to recover any favourable judgment against that defendant.

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.

In this case the High Court had to consider the mutual recognition provision in the EU Bank Recovery and Resolution Directive ("BRRD") and the Winding Up Directive for Banks (WUD) which provide for how the insolvency of EEA banks should be managed by member states.

This case highlights the different tensions that arise in the aftermath of the collapse of Banco Espirito Santo ("BES") between how creditors are treated under the BRRD and WUD and the flexibility given to central banks to restructure good and bad debts when a bank fails.