The Insolvency Act 1986 (“the Act”) provides Trustees in bankruptcy with a number of mechanisms to reverse transactions, entered into prior to a person being declared bankrupt by the court, which have the effect of diminishing a bankrupt’s estate to the detriment of his or her creditors. Antecedent transaction claims aim to recover assets back into the bankrupt’s estate for the benefit of creditors. Some commonly used provisions are transactions at an undervalue, preferences and transactions defrauding creditors.

On 20 October 2017 Registrar Derrett handed down judgment in the case of Thomas v Haederle (unreported), in which she gave reasons for dismissing a bankruptcy petition presented by the debtor (T) in the County Court at Norwich on 4 December 2014, pursuant to s 272 of the Insolvency Act 1986 (IA86), as it then was.

The Facts

The Court of Session has found that the EU Regulations to found jurisdiction for Insolvency proceedings based on COMI do not apply in a purely UK matter.

Bank Leumi (UK) plc (The bank) lodged a petition to make an Administration Order in respect of Screw Conveyor Limited (the company). While the company's registered office was in Birmingham, the bank stated in its petition that the company's centre of main interest (COMI) was in Scotland.

In this case, the claimant brought proceedings against the first defendant claiming damages for breach of a settlement agreement, and an order under s.423 of the Insolvency Act 1986 for the setting aside of the sale of a vessel. It was alleged that the sale of the vessel was a sham designed to put the first defendant’s assets out of the reach of the claimant. The latter claim was also brought against two other defendants, being the purchaser and sub-purchaser of the vessel.

A recent Court of Session case has made clear that a Scottish court cannot wind up or make an administration order in respect of an English registered company, and the same applies to English courts and Scottish companies.

Key Points

• Statutory powers are to be exercised in accordance with a company’s articles of association
• The Duomatic principle cannot simply be used as a bandage to cure a company’s procedural errors

The Facts

This appeal considered whether the sole director of a company, whose articles required two directors for its board meeting to be quorate, could validly appoint administrators under paragraph 22 Schedule B1 of the Insolvency Act 1986.

In a second application heard on the same day, Hildyard J considered an application by the administrators of Lehman Brothers Europe Limited (LBEL) for directions that would enable a surplus to be distributed to the sole member of LBEL while LBEL remained in administration. The proposed scheme had material benefits for both shareholders and creditors. The administrators acknowledged that the orders sought were an indirect means of circumventing the Insolvency Act 1986 (UK), which does not expressly provide for directors to make distributions during an administration.

This case considers section 245 of the Insolvency Act 1986, namely the rules on avoidance of certain floating charges, and provides analysis of the application of s245 notwithstanding the Liquidation originated in the British Virgin Islands.

SAW (SW) 2010 Ltd & Anor v Wilson & Ors [2017] EWCA Cif 1001 (25 July 2017)

The Court of Appeal has held that the validity of a floating charge (and the appointment of joint administrators under that floating charge pursuant to paragraph 14 of Schedule B1 to the Insolvency Act 1986) does not depend on the existence of uncharged assets of the company at the time of its creation, nor upon the power of the company to acquire assets in the future.

BACKGROUND