A client who is building a large mixed use development called me yesterday with a dilemma. He had received a letter from a local equipment supplier, who was on the verge of bankruptcy because the sub-contractor who had engaged him had gone into administration after the hire period had come to an end. He was pleading with my client to help him recover some £20,000 of hire fees still owed to him.

Facts

Longmeade went into compulsory liquidation. The liquidators were advised that the company had a good claim against BIS. The liquidators has secured third party funding in respect of the claim, which if successful, would double the dividend for creditors. However, 99% by value of the creditors of the company opposed the commencement of an action against BIS. The position of the few remaining creditors was unclear. The liquidators applied to the court for directions as to whether to cause the Longmeade to pursue the claim.

Held 

Facts

The company (‘Goldtrail’) was a tour operator. The director, who owned 100% of the company, had attempted to sell 50% of his shares to each of two companies without one knowing about the other. Goldtrail went into liquidation leaving passengers stranded overseas and owing £20m for repatriation.

Facts

The husband and wife were directors and shareholders of a company (‘C’). The husband was adjudged bankrupt in June 2014; the petitioners were appointed as his trustees in bankruptcy. Among the assets vested in the trustees under s 306 of the Insolvency Act 1986 (IA 1986), was the husband’s shareholding in C. However, the trustees were not registered as members of C until March 2015.

Facts

Solicitors, Stevensdrake, sought payment of costs from insolvency practitioner, Hunt. As liquidator, Hunt took action against two former administrators of an estate, and retained Stevensdrake for assistance. Early in their relationship, the parties agreed that Hunt would not be liable if there were no recoveries, and that the solicitors would be paid when there was a recovery from any source. The parties later entered a conditional fee agreement (CFA) with an express term stipulating that Hunt would be personally liable for unpaid fees.

Facts 

The respondents applied to set aside an order permitting the liquidators to serve the ‘Main Application’ on the respondents out of the jurisdiction (‘Set Aside Application’). Grounds of the application were: (i) the liquidators could not establish a serious issue to be tried/ reasonable prospect of success on the Main Application; and (ii) the initial without notice application had been procured by misrepresentation and/or material non-disclosure.

Summary: Customers of a company in administration were entitled, as against a factor, to exercise equitable set-off in respect of entitlements to rebates that had arisen between the customers and the company notwithstanding the assignment of the customer’s debts to the factor.

Bibby Factors Northwest Ltd v HFD Ltd [2015] EWCA Civ 1908 (17 December 2015)

Background

Does section 127 of the Insolvency Act 1986 void payments made by the insolvent company’s bank after the presentation of a winding-up petition but pursuant to payment instructions issued by the company before presentation of the petition?

Summary: The Public Administration and Constitutional Affairs Committee's findings in relation to Kids Company serve as a reminder of the risks of insolvency to large charities. The inherent weaknesses in the demand-led 'self-referral' operating model resulted in little to no reserves, and ultimately led to the trustees being required to file a petition to wind up the charity. Trustees of large charities must always be mindful of reserve levels.

The serious consequences of an adjudication of bankruptcy against an individual has long justified the strict requirement that bankruptcy petitions be personally served. Rule 6.14 of the Insolvency Rules 1986 requires as much, and says that ‘service shall be effected by delivering to [the debtor] a sealed copy of the petition’. But what constitutes delivery where the debtor declines to accept the petition from the process server?