With the news of major government contractor Carillion's liquidation, we look at the practical steps public bodies should be taking if Carillion is one of their contractors or is part of their supply chains so as to ensure there is as little disruption as possible across their service areas.

Contract review

A Belgian diamond and precious metals trader, Exelco NV, has filed a voluntary petition under Chapter 15 in the Bankruptcy Court for the District of Delaware (Case No. 17-12409). Exelco North America, Inc., along with three other American affiliates of Exelco NV, previously filed for Chapter 11 on September 27, 2017 (Lead Case No. 17-12029).

The special administrators of MFGUK have come up with a CVA proposal for its remaining ordinary creditors, which will enable the winding-up of the estate to the benefit of the creditors.

The administrators have made a number of material settlements and realisations during the administration, simplifying the estate and permitting distributions to ordinary unsecured creditors of 90p in the pound.

The High Court considered whether it would be appropriate to approve a scheme of arrangement for a company incorporated in Luxembourg where the company's COMI had been moved to England and there had been a change in the governing law and jurisdiction clause in favour of the English courts.

It has been held that full and frank disclosure was not provided to the Court by a Russian Liquidator in granting a Recognition Order in the UK, which resulted in the Recognition Order being set aside. The issue was determined despite the parties being in agreement that the Liquidator's claims should be withdrawn.

The Facts

Norton Aluminium Ltd (NAL) went into Administration following a partially successful nuisance claim against it and subsequently went into Liquidation. Mr Dickinson was the managing director and controlling shareholder and brought a claim to recover a secured loan made by him to NAL. The Liquidators counterclaimed to set aside or recover compensation for various transactions, including a share buyback from Mr Dickinson and connected parties by NAL for £2.5 million and the sale of a subsidiary to Mr Dickinson for £1.

Daniel Maurice Wagner -v- Benjamin Vincent St John White [2016] WL 10574979

Tech entrepreneur Ben White has successfully defended Dan Wagner's application to set aside a Statutory Demand in relation to Mr White's £2m investment in Powa Technologies PLC ("Powa"). Ashfords advised Ben White, with Joe Curl acting as counsel.

The Facts

1. Section 90K(1)(aa) of theFamily Law Act1975 (Cth) provides that a court may set aside a financial agreement if the court is satisfied that a party to the agreement entered into the agreement for purposes including the purpose of defrauding or defeating creditors, or with reckless disregard to the interests of the creditors.

In certain circumstances, liquidators may be at risk of personal exposure to costs orders in litigation. 

The court’s approach to the making of costs orders against liquidators depends on (amongst other things) whether the liquidator is a named party to the proceedings, whether the liquidator is commencing or defending proceedings, and whether the liquidator has acted ‘improperly’ or unreasonably in the commencement, maintenance or defence of the action.

Proceedings commenced by the liquidator / company in liquidation

On 19 October 2017, the Bankruptcy Amendment (Enterprise Incentives) Bill 2017 was introduced into Parliament by the Commonwealth Government in order to reduce the default period of bankruptcy from three years down to just one year. The stated objective of the Bill is “to foster entrepreneurial behaviour and reduce the stigma associated with bankruptcy whilst maintaining the integrity of the regulatory and enforcement frameworks for the personal insolvency regime.”