Why has the Financial Support Direction (FSD) been issued?

In a recent opinion (Masri v Consolidated Contractors International Co. SAL and others [2009] UKHL 43) handed down in the final days of the House of Lords, their Lordships clarified a point which may be of some significance for successful claimants seeking to enforce a Court order against corporate defendants.  

Kookmin Bank v Rainy Sky

We have received a number of urgent enquiries about the outcome of the Kookmin Bank case, which was recently decided by the Court of Appeal, in London. The judgment was issued at the end of May 2010 and held, in effect, that refund guarantees -- relating to advance payments of about US$46 million -- were unenforceable by the Buyers to whom the guarantees had been issued. Given the importance of refund guarantees to our shipping and banking clients, we are issuing this summary of the judgment and its general significance.

In Harms Offshore AHT ‘Taurus’ GmbH & Co KG v Bloom [2009] EWCA Civ 632, the English Court of Appeal had to decide whether it would grant an order to vacate an attachment on the property of a company in administration, even though the attachment was obtained by a creditor in a foreign court.

In Pick v Sumpter and another, the first defendant's trustee in bankruptcy applied for an order for possession of the defendants' matrimonial home. At the hearing in May 2006, the evidence showed that the sum outstanding as at November 2005 was £25,571 but did not take into account legal costs. That sum was an estimate and did not take into account statutory interest on the bankrupt's debts beyond the date of the hearing, solicitor's costs of the possession hearing or any increase or decrease in the trustee's remuneration.

When people are burdened with debt, they will sometimes resort to underhand tactics to relieve themselves of the consequences. One of the most common strategies is for the debtor to dispose of an asset, which would otherwise be used to pay his or her debts, for less than its market value. In consequence, there is legislation to protect the position of the creditors, who are, unusually, described as ‘victims’ in the legislation.

In our September 2009 Pensions update we reported on proposals to make changes to the employer debt regime aimed at assisting corporate restructurings. The final regulations have now been published and come into force on 6 April 2010. Under these provisions, where there is a corporate restructuring and one employer’s assets and pension liabilities are transferred to another, then as long as the prescribed steps (set out below) are followed, no statutory employer debt will arise. Employers relying on an easement will not be expected to seek clearance from the Pensions Regulator.

The Third Parties (Rights against Insurers) Act 2010 received Royal Assent on 25 March 2010. The Act modernises the Third Parties (Rights against Insurers) Act 1930 by streamlining the procedure by which a third party claimant can recover compensation from the insurer of a defendant.

Many of us in the construction industry seem to be hearing the same old bed time story over and over again: A instructs B to do the work; B does the work; A does not pay B; for months the parties dispute the level of payment due; B becomes fed up waiting for payment and takes steps to wind up A.

Is this the most appropriate way to deal with a disputed debt?

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