A late October 2010 case Straw Realisations v Shaftsbury House illustrates the courts’ approach to technical and insolvency-based challenges regarding enforcement of adjudicators’ awards. Given the current spate of contractor insolvencies and popularity of adjudication, any trust facing an adverse adjudicator's decision in favour of its contractor should not pay without due consideration.

In Gulf International Bank v Al Ittefaq Steel Products Co and others [2010] EWHC 2601 (QB), the High Court set out the factors that must be taken into account by the court when exercising its discretion to extend time for payment of sums due following an admission.

A guarantor can be made bankrupt where the terms of the guarantee create a debt obligation.

The implications of taking an appointment over an insolvent business which is regulated by environmental law can be far reaching. Environmental regulation has become more stringent and the sanctions for breach can leave the IP exposed to liability, including (amongst other things) costs sanctions.

The main environmental regimes referred to in this update are the contaminated land and water pollution regimes.

The Insolvency Service issued a consultation paper in July 2010 on proposals for a restructuring moratorium.

This follows a previous consultation paper titled Encouraging Company Rescue, issued in June 2009, which outlined three proposals:

Guidance published by HMRC in its Corporate Finance Manual has recently been updated to reflect a change in practice regarding the corporation tax treatment of debt for equity swaps.

Debt for equity swaps are commonly used in corporate restructuring, particularly when a company is in financial difficulty. They may also be encountered in the termination of joint venture arrangements where, prior to the sale of shares in the joint venture company by one co-venturer to the other, the parties wish to convert any loans made to the company into shares.

Arbitration proceedings in England are creatures of contract, arising out of the agreement between the parties to refer their disputes to arbitration. However, except in limited circumstances, when one of the parties to an arbitration agreement becomes insolvent, England’s statutory insolvency regime takes precedence over the rules of the arbitration.

The Insolvency Regime in England and Wales

In Clare Horwood & Others v Land of Leather Limited (In Administration) and Zurich Insurance Plc the Commercial Court was asked to consider in the context of a claim under the Third Parties (Rights Against Insurers) Act 1930 whether a compromise agreement entered into by an insured without the insurer's specific instructions in writing was in breach of a policy term. Under the compromise agreement, the insured had released a third party from an obligation to indemnify it in respect of various personal injury claims.

Following consultation last autumn, the Government is once again changing the Regulations under s75 Pensions Act 1995.

The changes1 take effect on 6 April 2010. They are intended to facilitate corporate restructurings. They also address some minor technical issues. The Government has postponed any more fundamental rewriting of the Regulations, saying that “this is a complex area that deserves closer consideration”.

Restructurings

An agreement with a company has gone into arrears. The vehicles may or may not have been sold. The company has placed itself into voluntary liquidation. Can the finance company take steps to protect itself if it suspects that there has been mismanagement or misappropriation of funds within the company? Yes. Where "prejudice" will be suffered by a creditor, the court can order a compulsory liquidation, where the activities of the company will be more vigorously examined than might otherwise be the case with a voluntary liquidation.