The Court has heard another case dealing with a defective appointment of administrators under paragraph 22 of Schedule B1 Insolvency Act 1986 (“Schedule B1”)¹. Following hot on the tail of a recent series of conflicting cases relating to defective appointments, the Court has held that:

In the matter of Lehman Brothers International (Europe) (In Administration) and in the matter of the Insolvency Act 1986 [2012] UKSC 6 On appeal from [2010] EWCA Civ 917  

Summary

As the economic clouds continue to darken and the threat of a double-dip recession increases, concern about exposure to unsecured bad debts will inevitably dominate the agenda of many companies. If the worst happens and a significant bad debt is incurred, many creditors are reluctant to review the possibilities afforded to them by the Insolvency Act 1986 and seek the solace of VAT bad debt relief. This is often the case even where it is suspected that the directors of the insolvent company have been culpable of misconduct.

Appointing administrators out of court has been thrown into complete disarray following Sir Andrew Morritt’s comments in Minmar. In that case, he said a directors’ out of court appointment would have been invalid if the company had not been given notice of the intention to appoint administrators.

In the recent English case of Pick v Chief Land Registrar [2011] EWHC 206(Ch), the High Court held that a buyer was entitled to be registered at the Land Registry as the registered proprietor of a property sold by a bankrupt. This was the case, even though the buyer allowed the priority period in which to effect registration to lapse, and the entry of a bankruptcy restriction was made on the title after the date of the transfer, but before the application for registration.

A recent Court of Appeal case confirms that the Foreign Judgments (Reciprocal Enforcement) Act 1933 does apply to judgments in insolvency matters and that the Insolvency Act 1986 can be used to enforce a foreign judgment.

In New Cap Reinsurance Corporation Ltd & Anr v AE Grant & Ors [2011] EWCA Civ 971, the Court of Appeal upheld the first instance decision of the Companies Court that a judgment obtained in Australia could be enforced in England under section 426 of the Insolvency Act (the IA) and at common law.

NEW CAP RE: THE FACTS

TiBs frequently assign the right to recover debts due to the bankrupt’s estate. The advantage to the TiB is that he receives a lump sum or a share of the proceeds of a successful claim for the benefit of the bankrupt’s creditors without having to fund and pursue litigation himself. In most cases, once a TiB has assigned the right to recover the debt that will be the end of the matter; he just has to wait for the litigation to be concluded when payment of the agreed share will be made. A recent Court of Appeal decision means that this will not always be the case.

Earlier this year, the High Court gave judgment in a case involving a bankrupt who owned property in Morocco (Saunders v Donovan, unreported). The bankrupt had also granted someone a power of attorney in respect of the Moroccan property. The question that fell to be decided by the High Court was four-fold:

In Re Ruiz (a bankrupt) [2011] EWHC 913 (Fam) the High Court ruled that a wife’s right to occupy the matrimonial home did not prevent her husband’s trustee in bankruptcy (TiB) gaining and enforcing a proprietary interest in the property.

The Facts

M and G married in 2001 and moved into a house purchased by M and registered in his sole name. In 2006 divorce proceedings were initiated, following which G obtained a freezing order over M’s assets and an occupation order over the marital home.  

MF Global UK Limited In Special Administration

The Financial Services Authority (“FSA”) has confirmed that MF Global UK Limited (“MF Global UK”) has entered the Special Administration Regime created under the Investment Bank Special Administration Regulations 2011 (“Regulations”).¹ MF Global UK is the first investment bank to enter the Special Administration Regime. The decision to apply for special administration was initiated by the board of MF Global UK.