Key Points:

Section 562A of the Corporations Act does not apply where liquidator realises a sum of money by assigning the proceeds of the reinsurance claim to a third party.

Liquidators of insurance companies face a major quandary when assessing reinsurance recoveries.

A new Court decision may undercut the legislative policy that reinsurance proceeds should be quarantined from the normal rules for paying out creditors of insolvent companies.

This article provides an essential update for insolvency practitioners on insolvency changes in 2015 and the proposed changes in 2016.

2015 Changes                

The Small Business, Enterprise and Employment Act 2015

In recent times, the legal profession has undergone widespread changes at the bequest of previous governments. The most draconian measures have been in relation to the expense of professional services. These include a budgeting and costs management process which is the subject of judicial approval. In essence, service provider’s fees and expenses are estimated and capped in advance of them being incurred.

Key Points:

These three cases illustrate that strict compliance with legislative requirements continues to be imperative when serving statutory demands.

Despite what appears to be a fairly straightforward legislative regime, creditors' statutory demands appear to generate an entirely disproportionate volume of litigation in the courts. The drastic consequences of failing to comply with a creditor's statutory demand warrant very strict compliance by creditors with the technical requirements of the regime.

Orla McCoy explains the connections between retention of title clauses, insolvency, and the Personal Property Securities Act.

Click here to view video.

The Pension Protection Fund (PPF) has issued a guidance note on Insolvency Practitioner remuneration which will apply where the insolvent company has a Defined Benefit Pension Scheme. The guidance note applies to pre and post appointment work.

The Guidance Note can be found here.

The Supreme Court has handed down its judgment in the case of The Trustees of Olympic Airlines SA Pension and Life Assurance Scheme –v- Olympic Airlines SA. Pitmans’ Trustee company, PTL, were the Appellants.

The question at issue was what connection must a foreign company, that has its Centre of Main Interests (COMI) in another EU country, have within the United Kingdom, to entitle an English Court to wind it up.

Key Points:

Principals or contractors dealing with insolvent downstream companies should ensure they can properly substantiate any counterclaims.

Usually a principal is not entitled to rely on a set-off or counterclaim to resist court proceedings to recover a debt under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act). However because of the operation of section 553C of the Corporations Act, the situation is different if the claimant is in liquidation.

Insolvent subcontractor’s claim

In the recent decision of Horton v Henry [2014] EWHC 4209 (Ch) the High Court held that a Bankrupt’s unexercised rights to draw his pension did not represent income to which the Bankrupt was entitled within the meaning of section 310(7) of the Insolvency Act 1986 and so refused to make an Income Payments Order. This contradicted the controversial decision in Raithatha v Williamson [2012] EWHC 909 (Ch) and has created uncertainty as to which is the correct position. The Horton case is being appealed.

The High Court has held that a bankrupt’s unexercised rights to draw his pension did not represent income to which the bankrupt was entitled and so refused to make an income payments order, contradicting the controversial decision in Raithatha v Williamson which held that a bankrupt’s right to draw income from a personal pension may be subject to an income payments order even if the individual has yet to draw his pension.

Horton v Henry [2014] EWHC 4209 (Ch)