In a recent case, the court held that a party to a settlement agreement (in this case a broker) cannot restrict the indemnity it is providing so that the indemnity is not payable if the insured goes into administration, or liquidation, or undergoes some other insolvency event. The decision is important on its own facts. But it does also raise questions about the legitimacy of other clauses in insurance contracts which depend on whether or not the insured or reinsured has entered into any kind of insolvency event.

CMS Cameron McKenna has learned that Registrars at the Companies Court in London have indicated that they now require applications for the extension of an administration to be issued at least 6 weeks before the administration is due to expire, unless there are "unusual reasons" justifying a later application. It is not yet clear what "unusual reasons" might mean in practice.

Summary

The High Court recently handed down the judgment in Ralls Builders Ltd (In Liquidation), Re [2016] EWHC 1812 (Ch). It was held that liquidators and administrators are not able to recover their own costs and expenses of investigating a wrongful trading claim from the directors of a company, even following a finding of wrongful trading under section 214 Insolvency Act 1986.

Background

Whilst there is evidence that, especially in the retail market, the number of store closures and resulting empty units is at its lowest level since a peak in 2012, high profile announcements such as that of BHS mean that they are still a reality. The Court has, with this decision, provided a timely reminder of the principles of surrender by operation of law of which landlords, tenants and guarantors should be mindful.

Summary 

A recent Scottish Inner House decision provides an overview of the approach to be taken in Scotland to interpreting performance bonds. The decision notes that the degree of compliance required when making a call may be strict, or not so strict, depending on the construction of the bond. The court’s decision also refers to the commercial purpose of the bond being key and may suggest that a more lenient approach to performance bonds is to apply in Scotland.

1. Applicable Law

1.1.1 Interim measures in Scotland are governed partly by court procedure rules and partly by statutory provisions. The relevant court procedures are determined by:   

• the nature of the interim measure sought; and
• the court from which the interim measure is sought.

1.1.2 There are two levels of court which may grant interim measures in civil proceedings, namely:   

A major consideration for any Claimant in an action seeking monetary damages is whether the Defendant to an action has the assets to meet a judgment, whether that be a claim against an individual or a limited company backed by the personal guarantee of an individual. That consideration should extend to a scenario where the Defendant has a judgment made against them and then either refuses to pay or cannot pay on time. The Claimant may have to seek their bankruptcy to achieve some payment.

Introduction:

The Government has launched a new consultation on a number of technical and regulatory changes affecting pensions legislation. One of the proposed changes is to amend the entry rules in relation to the Pension Protection Fund (PPF). The consultation follows on from the recent Supreme Court decision in Olympic Airlines and the introduction of specific legislation to ensure the beneficiaries of that particular scheme received protection in circumstances where the entry rules otherwise excluded them.

Introduction

We recently commented on a Scottish case involving dissolution, disclaimer and restoration (read our Law-Now here). There has now been an English case raising the same issues which on the face of it analyses the same provisions of the Companies Act 2006 (UK wide legislation) in a different way to achieve the same result.

The approach of the courts

Summary

On 14 October 2015, the Court of Appeal overturned a decision that two payments had been made in breach of a freezing order. The order prohibited the respondent to the freezing injunction application from dealing with or disposing of any of its assets other than in the ordinary and proper course of business. The Court held that the judge at first instance had taken too narrow a view in construing this exception and that, in light of the specific facts of the case, the freezing order had not been breached.