There are essentially three types of insolvency proceeding: liquidation, receivership and administration. Liquidators realise and distribute a company’s assets before dissolving the company. Receivers usually realise certain secured assets to repay certain debts, before appointing a liquidator. However, an administrator’s first objective is to rescue the company as a going concern. It is only if this is not practicable that the administrator can realise and distribute a company’s assets.

An action has successfully been brought by the administrators of Questway Limited, Oceancrown Limited and Loanwell Limited (all in administration) against Stonegale Limited and Norman Ralph Pelosi (the sole shareholder and director of Stonegale Limited) to reduce alienations of properties in Glasgow, under s.242(1) of the Insolvency Act 1986 (the “Insolvency Act”).

The Court of Appeal gave judgment today (15 November 2013) in favour of licensed insolvency practitioner Andrew Hosking (D), unanimously upholding a strike out judgment of Peter Smith J made on 22 February 2013. 

Stephen Hunt, liquidator of Ovenden Colbert Printers Limited (“OCP”), had sued D and 8 other defendants.  His claim against D was brought pursuant to sections 238 and 241 Insolvency Act 1986.  He alleged that D had received or benefited from payments made by OCP which constituted transactions at an undervalue. 

The guidelines laid down by the English courts for applying the balance sheet test for insolvency affects not only whether a company is technically insolvent, but also the enforceability of clauses in transactional banking documents and the ability of a liquidator to challenge certain antecedent transactions. The Supreme Court’s decision will therefore be welcomed by advisors, bankers and insolvency practitioners as it has overturned the high threshold laid down by the Court of Appeal.

CMS has succeeded in its application on behalf of HSBC to overturn the High Court’s decision inRe Tambrook Jersey Limited. The ruling will be welcomed by creditors and practitioners alike as the Court of Appeal has confirmed the UK courts have jurisdiction to grant assistance to a foreign court under the cross-border assistance provisions of section 426 of the Insolvency Act 1986 even where formal insolvency proceedings have not been opened in the foreign jurisdiction.

CMS is advising HSBC on its expedited appeal of a recent controversial decision by the High Court refusing assistance under the cross-border assistance provisions of section 426 of the Insolvency Act 1986.  The decision of the Court of Appeal will be of great interest to those involved in cross-border insolvency and restructuring as well as foreign courts.

In a recent case, the court held that a party to a settlement agreement (in this case a broker) cannot restrict the indemnity it is providing so that the indemnity is not payable if the insured goes into administration, or liquidation, or undergoes some other insolvency event. The decision is important on its own facts. But it does also raise questions about the legitimacy of other clauses in insurance contracts which depend on whether or not the insured or reinsured has entered into any kind of insolvency event.

A real, as opposed to remote, risk of insolvency is not necessarily enough for the duties of a board of directors to switch from being owed to its shareholders to being owed to its creditors.

Administrators can be validly appointed to a company by the holder of a floating charge which was given by the company in breach of a negative pledge in favour of an existing secured creditor and even if, both at the time of the purported creation of that floating charge and on the day of the purported appointment of administrators, the company had no assets which were the subject of the floating charge.

As the dust begins to settle after the EU referendum and the potential ramifications of Brexit continue to be digested, we examine the potential impact of Brexit on the UK cross-border restructuring and insolvency regime and its consequences for the UK’s reputation as a leading creditor-friendly restructuring jurisdiction.