Corporate insolvency in BVI is governed by the Insolvency Act, 2003 (as amended) and the Insolvency Rules, 2005 (as amended). These laws are closely based on the English Insolvency Act 1986. There are a number of insolvency regimes available.

Europe has struggled mightily during the last several years to triage a long series of critical blows to the economies of the 27 countries that comprise the European Union as well as the collective viability of euro-zone economies. Here we provide a snapshot of some recent developments relating to insolvency and restructuring in the EU.

Summary and implications

Almost exactly one year on from the Order* coming into force, many people remain unaware that it is no longer possible to appoint an administrative receiver over an overseas incorporated company.

Lenders and indeed insolvency practitioners should be aware that this is the case even when dealing with qualifying floating charges created before 15 September 2003 but alternative strategies, including administration, may be pursued to the same effect.

Administrative receivership

Introduction

As the insolvency profession in Scotland continues to get to grips with the new corporate insolvency rules, Re Sprout Land Holdings Ltd (in Administration) serves as a timely reminder not to forget the basics when dealing with the appointment of administrators by the directors of a company.

As some may be aware, the Court of Session last year issued a Practice Note on the subject of making applications to extend the period of administration beyond the initial 12 month period. 

In Re JT Frith Limited [2012] EWHC 196 (Ch):

• the terms of an intercreditor agreement; and
• some unwitting help from the junior creditors,

enabled a senior secured lender to benefit indirectly from the prescribed part on the insolvency of its debtor.

Existing law at a glance

The Enterprise Act 2002 introduced the prescribed part under a new section 176A(2) of the Insolvency Act 1986. It reserves part of the floating charge recoveries for unsecured creditors.

Since then, the courts have held that:

Where a company goes into administration and the administrators sell on part or all of the business the question arises whether accrued employee liabilities will pass over to the buyer, who may inherit an unexpected list of old debts.

Regulation 8(7) of TUPE 2006 attempted to mitigate the effect of TUPE in the case of certain insolvencies. Mirroring the wording in the Acquired Rights Directive, it provides that contracts of assigned employees (with their accrued liabilities) will not pass to the buyer where the transferor  

Section 113 of the Housing Grants, Construction & Regeneration Act 1996 (the 1996 Act) outlaws pay when paid provisions, with one exception. It is permissible for a Contractor to use a pay when paid provision to deny payment of outstanding amounts due to its Sub-contractor where the Client at the top of the supply chain has gone bust. The general consensus is of course that this exception is unfair. It is essentially asking the Sub-contractors to act as insurers of both the main Contractor and Client insolvency.

The cuts revealed in the Comprehensive Spending Review have not been quite as bad as the construction industry had apparently been expecting (£3.5 billion not as bad). Nevertheless there have still been billions of pounds shaved off various departmental budgets which will affect the construction industry. Where public spending has in the past been a reliable source of income, some companies are inevitably now going to feel the effect of the cuts.