Heads of Terms’ or ‘Memoranda of Agreement’ (“MoA”) are commonly agreed by parties as a precursor to entering into more substantial agreements.

MoA are often intended by the parties to be broad statement  of commercial intent to enter into a contract, rather than having contractual force themselves. Accordingly, MoA are often drafted with a more relaxed attitude towards their contents

However, no matter what the parties may have intended, a MoA can easily amount to a contract depending on its drafting, exposing the parties to unintended liabilities.

Introduction

Achieving sales growth is a significant challenge for many Australian businesses. Even if new customers can be found, an inability to collect and hold onto payments can pose another obstacle to growth.

To survive and prosper businesses must plan, and implement, strategies for sustained profitability. It is not enough to simply achieve fantastic sales results and get the money in, businesses must also anticipate, and protect against, the risk that payments received from customers may be clawed back if a liquidator is later appointed to the customer.

The recent unreported decision of the Bristol District Registry of the High Court in Blue Monkey Gaming Limited v Hudson & Others [2-14] All ER (D) 222 provides useful guidance for insolvency practitioners on the extent of their duties in respect of identification and preservation of ROT stock.

What was the case about?

The practice of energy companies in insolvency situations has long been a cause for frustration: in most cases the supplier will terminate the existing supply contract and a new - deemed - statutory contract at much higher rates will then apply.

After six years of legal action and investigations, the Pensions Regulator (TPR) has agreed a £184 million settlement with PwC, administrators for the Lehman Brothers Group, which has secured members' benefits under the UK pension scheme.  It also means the scheme will not go into the Pension Protection Fund (PPF).

Following the insolvency of the Lehman group in 2008, TPR began regulatory action in 2010 seeking the issue of a Financial Support Direction (FSD) to certain UK group companies.  An FSD requires recipients to provide extra financial support to a scheme.

The recent decision of the Federal Court in the matter of Divitkos, in the matter of ExDVD Pty Ltd (In Liquidation) [2014] FCA 696 confirms that where a receiver is required to make a payment under Section 433 of the Corporations Act 2001 (Cth) (Act) to a priority creditor (such as employee entitlements), the secured creditor (who appointed the receiver) may be entitled to be subrogated to the rights of that priority creditor in the winding up of the company.

The Law

This update considers the recent High Court decision in Thomasand Another v Edmondson (12/05.2014) concerning the court’s ability to make an income payment order against a bankrupt who is already subject to an income payment agreement.

The background

This update focusses on Teresa Graham’s recent review on pre-pack administration published by the  Government which sets out areas for improvement and provides detailed recommendations to help better the procedure.

The background

Preamble

The COMI rules prevent a foreign based company from accessing the UK insolvency regimes, unless it has a sufficient connection with the UK. However, in Christophorus 3 Limited the High Court approved the ‘flipping up’ of a specially created UK newco in a German group to enter administration.

The background

The High Court described this case as ‘an elaborate scheme for the restructuring and refinancing’ of a German group.