In our last article, which can be found here, we reported on the government’s intention to give HMRC priority in the recovery of certain debts (including VAT, PAYE, Employee NICs, and Construction Industry Scheme deductions ) in insolvency proceedings.
In the recent case of Signature Living Hotel Limited v Andrei Sulyok Roxana Monica Cocarla [2020] EWHC 257 (Ch), 2020 WL 00929732 the High Court considered whether two deeds of guarantee which failed as deeds (because the formalities for a deed had not been complied with) remained enforceable as a matter of contract.
In June 2019 the Government announced a plan to introduce a new “breathing space” scheme to protect individuals and families struggling with problem debt and to give those individuals and families extra help and time to get their finances under control.
In the landmark decision in Re Systems Building Services Group Limited [2020] EWHC 54 (Ch), ICC Judge Barber held that the duties of a director survive the insolvency of a company.
Despite discussion in 2019 about corporate insolvency reforms and the reintroduction of the Crown Preference for certain tax debts, the Queens Speech on 19 December 2019 did not indicate any concrete plans to legislate for these areas this year. Airline insolvency, however, has made the list for 2020.
Why is airline insolvency a priority?
A recent High Court case has provided welcome clarity for LPA and fixed charge receivers as to the scope of their duty of good faith and potential conflicts of interest. Walker Morris’ Housing Management & Litigation Partner Karl Anders and Banking, Restructuring and Insolvency Director Owen Ormond explain.
Why is this case of interest?
HMRC has issued a consultation on the announcement in last year’s Budget to introduce legislation to restore HMRC’s position as a secondary preferential creditor in company insolvencies. This may impact upon pension schemes.
There have been a number of recent instances, including this year, of quoted companies calling general meetings to seek shareholder approval to remedy dividends that were paid unlawfully. Invariably these have been for non-compliance with a statutory formality rather than because the company did not have sufficient distributable profits to make the dividend.
Why are companies prepared to suffer the embarrassment and expense of going to their shareholders to fix the breach rather than simply doing nothing?
The Court of Appeal has reiterated some important rules for funders involved in debt purchase. Banking Litigation specialist Alasdair Urwin looks at the recent case of Bibby Factors Northwest v HDF and MCD [1].
Buyer beware
This case concerned a factoring agreement, pursuant to which a funder (Bibby) purchased unpaid invoices from another company (the Assignor), including debts owing from the defendant companies (the Customers).
In Stevensdrake Ltd v Hunt and others [1] the liquidator of Sunbow Limited, Mr Hunt, had brought a claim against Sunbow's former administrators. Mr Hunt entered into a conditional fee agreement (CFA) with the solicitors instructed to pursue the claim (Stevensdrake). The CFA stated "if you [Mr Hunt] win your claim, you pay our basic charges, our disbursements and a success fee". A settlement was agreed but one of the former administrators failed to pay the agreed sum.