The question for the court in Durkan & Anor v Jones (Re Nicholas Mark Jones) [2023] EWHC 1359 (Ch) was whether it had jurisdiction to make a bankruptcy order.

Official Receiver v Kelly (Re Walmley Ash Ltd and Company Directors Disqualification Act 1986) [2023] EWHC 1181 (Ch) deals with an application for a disqualification order under s 6 Company Directors Disqualification Act 1986 against Andrew John Kelly arising out of his conduct as a director of Walmsley Ash Ltd which was wound up by the court on an HMRC petition in 2017. The conduct relied on was that:

In the recent case of Re Avanti Communications Limited (in administration) (Re Avanti), the court considered the nature of fixed and floating charges. Whether a charge is fixed or floating has implications for both lenders and administrators in terms of determining to what extent a chargor can recover from the charged assets and to what extent a borrower can deal with its assets.

Background of case:

Managing the financial health of a business to ensure it continues to be viable and successful can be challenging, particularly in today’s economic environment.

June 2023

Contents

In the recent case of Re JD Group Ltd in liquidation; Bhatia v Purkiss (as liquidator of JD Group Ltd) a company director appealed a decision that he was liable for VAT fraud.

Background

Mr Bhatia was the sole director of a company trading in mobile phones. He was sent a HMRC notice explaining the risks of mobile phone trading and liability for involvement in VAT fraud.

The English tax authority, HMRC, has successfully challenged the restructuring plans put forward by The Great Annual Savings Company Limited (GAS) and Nasmyth Group Limited (Nasmyth).

This is the first time that HMRC has actively challenged restructuring plans at the sanction hearing. The key takeaways from the judgments:

Nasmyth

In a dramatic reversal of restructuring plan fortunes, HRMC recently successfully challenged two independent mid-market Part 26A Companies Act 2006 restructuring plans: the Nasmyth Group Limited Restructuring Plan (the Nasmyth RP) and the Great Annual Savings Company Ltd Restructuring Plan (the GAS RP). To date, only one other restructuring plan has been refused sanction.

The characterisation of a charge as fixed or floating can have significant ramifications for the chargee on chargor’s insolvency. This is because the holder of a fixed charge enjoys significant advantage, in terms of the order of priority of distributions to creditors, over a floating charge holder.

On 16 May 2023, Mr Justice Adam Johnson in the High Court refused to sanction the restructuring plan proposed by The Great Annual Savings Company Limited (GAS) following objections from HMRC.

The English Court has refused to sanction two separate restructuring plans proposed by Nasmyth Group Limited (Nasmyth) and The Great Annual Savings Company Ltd (GAS). Both companies sought to use Part 26A of the Companies Act 2006 to “cram down” His Majesty’s Revenue and Customs (HMRC). Whilst neither decision is the first time that Part 26A has been used in this way¹, they are the first to involve any active participation by HMRC in the sanction hearing².