In his Pre-Budget Report delivered on 24 November 2008, UK Chancellor of the Exchequer Alistair Darling announced the Government’s intention to introduce special insolvency procedures for investment firms holding client assets or client money.  

The procedures will be introduced by secondary legislation under the Banking Bill (which was introduced into Parliament in October 2008) following a government sponsored review by an expert liaison group.  

The review, to be concluded by summer 2009, will consider, inter alia:  

Today, the U.K. Treasury announced that it “has taken decisive action to protect the interests of retail depositors and wider financial stability” by placing London Scottish Bank plc in administration.

On 15 September 2008, the FSA published a statement concerning Lehman Brothers Holding Inc.

In the statement the FSA states that Lehman Brothers Holding Inc, a US investment bank, announced that it intends to file a petition under chapter 11 of the US Bankruptcy Code.

Introduction

On 25 July 2008, HM Treasury published a Consultation Paper entitled Modernising the insolvency protections for the operation of financial markets - proposals to reform Part 7 of the 1989 Companies Act (the Consultation Paper).

Proposals

In Sea Emerald SA v Prominvestbank - Joint Stockpoint Commercial Industrial & Investment Bank - Lawtel 19.8.08 the Commercial Court gave a reminder of the importance of ensuring that the person signing a guarantee upon which you may seek to rely has authority to do so.

The FSMT has handed down its decision in the case of Asgar Ali Ravjani (trading as Astrad Finance) v Financial Services Authority, which involved the failure to disclose a discharged bankruptcy to the FSA.

Having obtained a possession order against the claimant’s property, the bank then sold it. Issues arose as to whether certain fixtures, fittings and chattels in the property formed part of the sale of the property. The claimant brought claims, amongst others, to recover the fittings and other items, a claim for damages for conversion of those items, and a claim that the property had not been effectively transferred to the buyer as the bank had no title to transfer the chattels to the buyer.

The defendant supplied drink to the owner of a club, the cost of which was secured by a charge over the club premises. The owner wished to re-finance his debt to the defendant and took a remortgage with the claimant to be secured as a fist legal charge on both the club and the owner’s house. Part of the remortgage monies were paid to the defendant in partial satisfaction of the sums outstanding. Both the claimant and defendant were granted legal charges over the house.

The claimant and defendant both lent money to a company (Y) under a credit facility. Y’s financial position deteriorated, the parties appointed investigating accountants and put Y into “workout”. Following an assignment of Y’s indebtedness to the claimant to the defendant’s subsidiary, the claimant brought proceedings against the defendant for breach of an anti-claim clause in the assignment.

The bank took a charge on the borrowers’ property. In January 1992, it demanded payment of the balance due under the secured facilities. In June 1992, it made a further formal demand specifically relying on the mortgage. One of the borrowers was subsequently made bankrupt. Periodically, the bank informed the borrowers that they continued to be liable and made demands for payment and referred to the mortgage.