In the recent case of HMRC v Munir & Others[1], HMRC successfully applied to the Court for committal of three company officers for contempt of court where an order appointing a provisional liquidator was knowingly breached.
Background
ADVISORY | DISPUTES | TRANSACTIONS Financial Litigation roundup Spring 2015 Welcome to the latest edition of our Financial Litigation roundup. In this edition, we consider recent judgments and ongoing cases from the banking and financial world in the UK and Asia, as well as regulatory developments across those jurisdictions. English judgments SPL Private Finance (PF1) IC Limited and others v Arch Financial Products LLP and others; SPL Private Finance (PF2) IC Ltd and other v Robin Farrell. more> McWilliam v Norton Finance (UK) Ltd (in liquidation).
Removal of requirement for sanction
Previously under section 165 IA 86, liquidators in a voluntary winding up would have to seek sanction of the company (in members’ voluntary liquidation) or of the court or liquidation committee (in creditors’ voluntary liquidation) in order to exercise their powers to pay debts, compromise claims etc. SBEEA removes this requirement so that liquidators can exercise those powers freely. This will aid expeditious winding up of companies. Equivalent provisions have also been put into place for trustees in bankruptcy.
The Supreme Court has confirmed in Jetivia v Bilta that where a company brings a claim against its directors for losses caused by their wrongdoing, the directors cannot escape the claim by arguing that their actions are attributed to the company itself.
The Supreme Court also held that s.213 of the Insolvency Act, (which permits the Court to take action against those who have conducted the business of a company in order to defraud creditors) was not jurisdictionally confined and applied to people and companies resident outside the UK.
In April 2013, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) came into force, making the success fee applied to a Conditional Fee Arrangement (CFA), and the After the Event (ATE) insurance premiums, irrecoverable by a successful party to litigation proceedings. However, under article 4 of LAPSO, there is an "insolvency exemption" making these costs recoverable by an insolvency practitioner.
Employees who transfer to a new employer from a business that is under insolvency proceedings may be able to recover unpaid wages and other debts from the Secretary of State.
However, BIS v Dobrucki has confirmed that the Secretary of State will only pick up the liabilities of the old employer (the transferor). It will not be responsible for liabilities that are incurred after the transfer has taken place; that is, any liability of the new employer (the transferee).
The background
The 18 March saw George Osborne’s budget speech, heralded by Mr Osborne announcing that “Britain is walking tall again” and promising to “use whatever additional resources we have to get the deficit and the debt falling”. We examine what the drivers behind the hyperbole might mean for the insolvency community.
Further austerity as the key theme
This quarter has seen a wave of legislative and regulatory reform on the way. We review some of the more significant developments.
Insolvency exemption to the Jackson reforms extended indefinitely
Summary
The recent judgment of Mrs Justice Proudman in Plaza BV –v- The Law Debenture Trust Corporation1 illustrates and extends a line of authorities in which the English courts have sought to narrow the scope of the mandatory application of Article 2 of the Brussels Regulation 44/2001. These cases are a reaction to the broad interpretation of the applicability and effect of Article 2 set out in the ECJ's decision in Owusu –v- Jackson2 , and attempt to confine the influence of that decision.