The UK Supreme Court recently considered the scope of the following tests for whether a company is unable to pay its debts (as set out in section 123(2) of the Insolvency Act 1986):

• The company is unable to pay its debts as they fall due (the "cash-flow test") and
• The value of a company's assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities (the "balance-sheet test").

The Supreme Court confirmed that:

The Northern Ireland High Court has annulled a bankruptcy order made with procedural irregularities that would have allowed the debtor to escape the much heavier consequences of a debt in the Republic of Ireland.

In the case of Garwood v Bank of Scotland PLC, the English High Court found that a charge that had been mistakenly released should be re-registered over property in the estate of a bankrupt, although this meant that the estate available to unsecured creditors would decrease.

Hackney Empire Ltd v Aviva Insurance Ltd [2012] EWCA Civ 1716 concerned the issue of whether a guarantor will still be liable when there are additions or alterations in respect of the original contract. Hackney Empire Limited (HEL) had entered into a contract with Sunley Turiff Construction Limited (STC), under which STC was to restore the Hackney Empire Theatre in London. STC's performance was guaranteed by Aviva Insurance Limited (Aviva) through a bond executed prior to the construction contract being signed.

In Ebbvale Ltd v Andrew Lawrence Hosking (Trustee in Bankruptcy of Andreas Sofroniou Michaelides) [2013] UKPC 1, the Privy Council upheld a winding-up order against a Bahamian company, even though the principal purpose of the petitioning creditor may have been related to obtaining an advantage in separate proceedings in the United Kingdom.

Earlier last month, the UK High Court held that administrators appointed under the Investment Bank Special Administration Regulations 2011 (UK) are not officers analogous to liquidators.

The ruling arose from an application for directions made by investment bank administrators (IBAs) on the issue of whether their appointment was analogous to the appointment of a liquidator. Had the Court held in the affirmative, their appointment would have constituted an event of default by the company in administration under the terms of a global master repurchase agreement.

In the recent English decision of Neumans LLP v Andronikou & Others, a company had unsuccessfully opposed a winding up petition and the question for the Court was whether the solicitors' costs in doing so were an expense of the administration. In considering this issue, the Court noted that there would have to be "some special reason, connected with the administration" to make the administrators pay fees in full as an expense when statutory provisions did not allow for solicitors to have priority over other creditors and those entitled to claim expenses.

The High Court of England and Wales has recently grappled with a lacuna in United Kingdom bankruptcy law, namely how the expenses of a trustee in bankruptcy should be dealt with where the bankruptcy order from which he derives his title is successfully overturned on an appeal of which he was not notified? The Court ultimately found that it was within its inherent jurisdiction to hold the bankrupt liable to pay the trustee's reasonable expenses. However the case highlights the gap in the United Kingdom's bankruptcy laws in failing to provide adequate guidelines in this scenario.

Further to our October 2011 update, the UK Supreme Court has released its decision in respect of the New Cap Reinsurance and Rubin appeals.

Meem SL Limited was an unsuccessful start-up company in the United Kingdom.  The board resolved to put the company into administration and sell the business to a company owned by the directors.