The Court of Session has reiterated that balancing of accounts in bankruptcy may be relied upon by a defender in enforcement proceedings to successfully resist enforcement of an adjudicator's award. See Richard Heis & others as joint administrators of Connaught Partnerships Ltd (in administration) v. Perth & Kinross Council.
A recent overruling by the Supreme Court has revoked the priority status of pension schemes issued with a Financial Support Direction (FSD) or Contribution Notice (CN) by the Pensions Regulator, following an insolvency event. Whilst the decision largely affects companies operating within England and Wales, Scottish Courts are expected to be guided by the ruling.
The 2011 decision
OSCR report issued following investigation of benefits to employee on wind-up
Lazari GP Ltd v Jervis
When a company goes into administration, it benefits from a "moratorium" that prevents creditors taking legal and other proceedings against the company or its assets. The main purpose of the moratorium is to free an administrator's rescue attempts from the distractions of legal action from creditors.
The Issue
With the depressing news that more than 20,000 Scots will go bust in 2012, and an average of 25 Scots firms a week will go under this year, it has never been more important to be alert to payment disputes.
The recent flurry of news reports regarding the administration of high street retail chains and the subsequent sale of parts of their businesses is perhaps an opportune time to flag up the renewed importance that the hypothec plays in Scottish property law.
By virtue of the hypothec, in insolvency, a landlord automatically obtains a fixed charge ranking on the proceeds of sale of the moveable goods of the tenant that are on the premises as at the point of insolvency, up to the value of any arrears of rent.
Agreements with administrators often contain provisions to the effect that any claim against the company in administration will rank only as an unsecured claim and not as an expense of the administration. Although such provisions are common, there has always been some doubt as to their efficacy.
Key2Law (Surrey) LLP -v- De' Antiquis [2011] EWCA Civ 1567
The Court of Appeal issued its long-awaited Judgment in the case of Key2Law (Surrey) LLP -v- De' Antiquis, confirming that businesses which are in administration are not exempted from TUPE.
The First-tier Tribunal has issued its decision in the case ofM Gilbert (t/a United Foods) v HMRC, one of the first cases concerning a claim for entrepreneurs' relief to reach the First-tier Tribunal. The Tribunal was asked to decide whether a taxpayer had disposed of part of his business or, as HMRC argued, simply sold some of the assets used to carry on the business.