A recent TCC decision highlights the dangers of withholding payment against contractors with a view to pushing them into insolvency. The court allowed the recovery of insolvency professional fees as well as a substantial sum reflecting a reduced settlement reached with a third party on a separate project. The court’s decision has ramifications for any party seeking to withhold large payments under a construction contract against a party who is likely to suffer serious cash-flow pressure as a result.
House of Fraser (HOF) has been in the headlines for months. It started with reports of widening losses and being dragged down by soaring costs and a drop in consumer sales, but official comment from the 169-year old retailer remained positive. Then there were rumours of CVAs and negotiations with landlords leading to further controversy. Finally, last Friday (10 August 2018), a stock market announcement delivered the news that Mike Ashley’s Sports Direct had brought House of Fraser out of administration for £90 million, just hours after the store had announced its collapse.
A recent TCC decision has ruled that adjudication proceedings cannot be brought by companies in liquidation in relation to financial claims under a construction contract. The decision will have considerable ramifications for the practical management of liquidations for companies with exposure to construction contracts. The decision would appear to run contrary to current liquidator practice, both as to the use of adjudication proceedings in liquidations and as to the assignment of claims to third parties, but essentially only confirms the mandatory nature of insolvency set-off.
As if business leaders did not have enough to contend with in the current economic and geopolitical climate, the trend towards increased personal accountability for company directors is continuing and can be expected to increase further. How can directors protect themselves? As a start it is important for both executive and non-executive directors to understand the overarching principles involved and how they link together.
The basic duties set out in the Companies Act 2006
Speed read
The British government has commenced an airline insolvency review, in the wake of recent high profile airline failures such as Monarch and Air Berlin, and on the premise that changes in the industry have outpaced protection regimes.
The review will focus on two main areas: repatriation of stranded passengers and redress for consumers. There is a desire to minimise repatriation costs falling on the public purse and ensure that consumers have clear avenues of redress.
We closed the first quarter of 2018 following a period of intense scrutiny on the restructuring and insolvency profession. The stress in the retail and dining sectors, the increase in CVAs and the various attendances of stakeholders in the profession before Select Committees has been the forerunner to two consultation papers.
As the nights drew in, the end of 2017 saw a flurry of case law on security for costs, and particularly its interaction with after the event (ATE) insurance and litigation funding. This article considers what insights can be gleaned for litigants who do not want to be left out in the cold.
Premier Motorauctions: security for costs and ATE
The Inner House of the Court of Session has found that, where a business had no realistic prospect of continuing in existence, it was not appropriate to assess whether a property was sold at an undervalue by reference to a forced sale valuation.
The Court’s judgment serves as a valuable reminder of some fundamental principles of insolvency law.
The facts
A recent TCC decision has concluded that the contractor insolvency provisions of the JCT form continue to apply after a termination by the contractor for repudiation. This conclusion may give rise to surprising results and potentially allow an employer to claim from the contractor additional amounts incurred in completing the works with a third party even after termination for the employer’s own default and/or repudiation.
The raft of European and domestic litigation surrounding Mastercard fees has been long running and frankly, brain achingly complex. Hidden in the masses of litigation, the topic has sparked little interest in insolvency practitioners. However, it has the potential to generate realisations in liquidated estates where there may otherwise be nothing to offer creditors, and it warrants attention as a result.