On 29 February 2012, the Supreme Court of the United Kingdom handed down its long-awaited judgment on client money issues in the context of the Lehman's Administration. The judgment has an important bearing on likely recoveries for both segregated and non-segregated clients, the further work to be conducted by the Administrators and timing of distributions.
Summary
The Supreme Court has found that:
The High Court has held that where litigation is commenced against the administrator of a company, arising out of contractual obligations entered into in that capacity, he or she will not be personally liable, despite the insolvent company being unable to meet the resulting liability.(1)
Introduction
Introduction
Hildyard J’s recent sanctioning of the scheme of arrangement proposed by PrimaCom Holding GmbH (‘’PrimaCom’’), a German incorporated company whose creditors were domiciled outside of the UK, has reaffirmed the extra-territorial jurisdiction of the English courts in respect of schemes of arrangement and confirmed their status as a useful instrument for foreign companies looking to restructure1.
The process
Background
The United Kingdom Supreme Court recently decided the appeal in the important case In the Matter of Lehman Brothers International (Europe) (LBIE) (In Administration) and In the matter of the Insolvency Act 1986 [2012] UK (the Case).
In summary, the Case is about which claims can be treated as claims for client money. This turns on interpreting the rules of the UK’s Financial Services Authority’s (FSA) Client Assets Sourcebook (CASS) in chapter 7 of CASS. These FSA rules stem from the Markets in Financial Instruments Directive (MiFID).
In an earlier blog I touched upon the belief which exists within certain parts of the market that there is still a way to go in the re-pricing of non-prime assets. Some commentators are predicting that this re-pricing will take place through 2012 and into 2013, the hope being that we will start to see greater activity in the secondary market in the second half of next year.
Pritchard Stockbrokers Ltd has become the second firm to enter into the investment firms Special Administration Regime. FSA stopped the firm carrying out its business on 10 February because of serious concerns about the business and how the firm was handling investors’ money. WH Ireland has taken over the assets belonging to most of the firms’ customers. (Source: Stockbroker Goes Into Special Administration)
Where there is no evidence of lack of authority in placing orders which have not been paid, the court refused to allow an injunction to restrain a winding-up petition.
In the matter of A company (2012) (the company), a creditor had issued a statutory demand against it in relation to invoices for advertising placed with it by the company's sales and marketing manager (M) that were unpaid. The company argued that those orders had been placed without its authority and M admitted that she had exceeded her authority in so placing them.
USDAW v WW Realisation 1 Limited (in Liquidation)
You probably wouldn't recognise it from the case name but this case results from the closure of the much loved and sorely missed Woolworths.
Employers are obliged to carry out collective consultation with appropriate representatives when proposing to dismiss 20 or more employees from an establishment over a 90-day period: the length of the consultation period is dependent on the number of employees being dismissed.
The Supreme Court yesterday ruled that client money held in un-segregated accounts should be treated the same as client money held in segregated accounts, enabling un-segregated account holders to share in the client money pool on the insolvency of a firm with whom the account is held.