Section 342A and the further associated provisions within the Insolvency Act 1986 (“the Act”) provide a Trustee in Bankruptcy with the power to apply to seek to recover pension contributions made whether by the bankrupt himself on his own behalf or by another on his behalf.
Before the Court can grant relief it has to be sure that the rights under the pension scheme are the fruits of the complained of contributions and further that the contributions have unfairly prejudiced the individual’s creditors (Section 342A (2)(a) and(b).
In a recent case, BTI 2014 LLC v Sequana SA & others, the High Court was asked to consider the circumstances in which the directors of a company are required to consider the interests of creditors and the extent to which the payment of a dividend by a company can be susceptible to challenge under section 423 of the Insolvency Act 1986 (IA 1986).
Lovers of Shakespeare will no doubt recognise the aforesaid phrase. As this is Shakespeare’s 400th birthday year, I thought it apt to borrow one of his most famous phrases.
The use of Shakespeare in a legal article may appear to many readers misplaced. However, the expression does, in my view, capture a serious dilemma facing creditors when trying to invoke what appears to be a cost-effective and quick way of recovering money.
In the recent case of BTI 2014 LLC v Sequana SA & others [2016] EWHC 1686, the High Court has held for the first time that a dividend can be challenged as a transaction entered into at an undervalue within the meaning of section 423(1) of the Insolvency Act 1986 (the “IA”).
The Facts
The facts of the case are long and complex but for present purposes the pertinent facts are as follows.
Arjo Wiggins Appleton Limited (now Windward Prospects Limited) (“AWA”) was a wholly owned subsidiary of Sequana SA (“SSA”).
Validation orders under s127 Insolvency Act 1986 will only be made:
- in special circumstances
- where a particular transaction is one that is in the interests of the creditors as a whole; and
- the circumstances warrant the overriding of the pari passu principle
The Facts
Ever wondered what ‘administration’, in the company/business sense actually means? Partner and Insolvency specialist Chris McDuff explains here in the second of our blog series on options for an SME when it finds itself experiencing financial difficulties.
Administration
The Insolvency Act 1986 (the Act) and theInsolvency Rules 1986 (the Rules) govern the administration process for England and Wales.
What is Administration?
Summary
The High Court recently handed down the judgment in Ralls Builders Ltd (In Liquidation), Re [2016] EWHC 1812 (Ch). It was held that liquidators and administrators are not able to recover their own costs and expenses of investigating a wrongful trading claim from the directors of a company, even following a finding of wrongful trading under section 214 Insolvency Act 1986.
Background
Original news
Goldcrest Distribution Limited v McCole and others [2016] EWHC 1571 (Ch)
What is the background to this case?
The claimant lender, C, sought possession of residential property owned jointly by D1 and his partner D2 (the property) pursuant to a purported legal charge entered into by both the D1 and D2 (the charge). The charge secured D1’s liability to C arising under a guarantee whereby D1 had guaranteed the indebtedness of his company, "Ascot" to C.
Appointment of receivers in respect of a group entity takes “control” of that entity outside the group for tax purposes, but does this decision have more far reaching consequences?
The First Tier of the Tax Tribunal heard appeals against closure notices issued by HMRC denying claims for group relief by a group of companies, including a company over whose assets a fixed charge receiver (FCR) had been appointed (the Borrower).