A new Statement of Insolvency Practice relating to pre-packaged sales in Administration has been issued and has effect from 1 November 2013.

This provides for earlier notification to creditors of the sale and the justification for it and provides a more extensive list of information that must be included.

The main changes are:

A party's right to terminate a contract in the event that the other party becomes insolvent is one of the most commonly seen termination rights in outsourcing and technology agreements. However, the effectiveness of such provisions in the future could change in agreements governing the provision of IT services, as the new Enterprise and Regulatory Reform Act 2013 gives the Government the power to extend the law that currently protects supplies of gas, water, electricity and communication services during an organisation's insolvency to the supply of IT services.

The UK’s Insolvency Act 1986 sets out in s.123 various tests to determine whether a company should be deemed unable to pay its debts. The relevance of these tests to distressed companies is obvious: deciding as they do when it is appropriate to seek an administration order or present a winding up petition. They also help determine directors’ duties, antecedent transactions and issues such as wrongful and fraudulent trading.

The Court of Appeal’s decision in the matters of Nortel GMBH and Lehman Brothers International (Europe) (both in administration) and other companies has been overturned by the Supreme Court. Liabilities imposed on insolvent companies by the Pensions Regulator (“tPR”) will not be treated as an expense of the insolvency, which would be payable by the office holder in advance of making payment of his own remuneration or to floating charge holders. The liability will rank as an unsecured debt rateably with all other unsecured creditors.

The majority of businesses have periods of stress and distress during their life cycle. The keys to managing these periods to achieve a successful profitable business are recognition, decision and implementation.

In most cases, management are aware (from available internal management information) of issues arising before they do in terms of a potential reduction in revenue or increase in cost. Once these periods are recognised management can move to address them by taking decisions to manage the situation to a positive outcome.

The judgment handed down on 6 June 2013 by the Court of Appeal in the case of The Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA [2013] EWCA Civ 643 reversed a High Court decision made in May 2012 that a winding up order could be granted in the UK in respect of Olympic Airlines, the Greek national airline, which was in liquidation in Greece as a result of it receiving illegal state aid and the privatisation of the airline business.

We note with interest the Government's Discussion Paper, 'Transparency & Trust: Enhancing The Transparency of UK Company Ownership And Increasing Trust in UK Business', published yesterday.

In the Paper, the Government proposes to (amongst other things):

A look at the recent restructuring of the Co-operative Bank and EU proposals for mandatory reform

The Co-operative Bank announced in mid-June that it would need to carry out a forced listing of £300m new shares on the London Stock Exchange to fill a capital hole of around £1.5bn. Co-op's difficulties are said to have been triggered by mounting losses at Britannia Building Society - which Co-Op acquired in 2009 - that were highlighted when the bank failed to follow through on its planned acquisition of 632 Lloyds branches in February this year.

The Landlords of units occupied by Game have been given permission by the Court to appeal to the Court of appeal against the principles laid down in Goldacre (Offices) Ltd v Nortel Networks UK Ltd (In Administration) [2009] EWHC 3389 (Ch) [2010] Ch 455 that rent falling due before the commencement of an administration does not fall to be paid as an expense of the administration.

A recent decision of Mr Justice Mann in VLM Holdings Limited v Ravensworth Digital Services Limited [2013] EWHC 228 (Ch) held it is possible that termination of a head licence on insolvency of the licensor does not necessarily mean a sub-licence becomes ineffective.

What was it all about?