The Court of Cassation has considered whether company insolvency proceedings may be extended to a managing director and shareholder who has made payments to himself from the company's bank account.

Background

Welcome to our monthly newsletter, with a summary of the latest news and developments in UK employment law.

In this issue

• Case law updates
• Legislative developments
• Other news
• New guidance
• Consultations

 Recent publications

When does a company give a ‘preference’ in breach of insolvency legislation? The award-winning corporate attorneys at ParrisWhittaker are highly experienced in advising companies and creditors on corporate insolvency matters when they need timely advice.

An important appeal court ruling on the timing of a decision made to enter into a transaction provides clarity on what may amount to a preference in a creditor’s favour. The UK Court of Appeal has persuasive authority on the courts in The Bahamas and should be noted.

What is a ‘preference’?

This article originally appeared on Law360.

The uptick in bankruptcy cases will mean more work for insolvency professionals who specialize in asset tracing. Some of the most interesting work will arise in cases where companies engaged in significant fraud.

Each bankruptcy cycle has these cases. In 2001, Enron Corp. filed for bankruptcy. In 2008, there was Bernie Madoff. The latest example is FTX Trading Ltd.

According to a recent report, nearly 6,000 construction companies in the UK are in danger of going out of business. In Hong Kong, a major contractor has lost its licence and was removed from the government's registered list of contractors on 16 November 2023, with the company being given only a month to settle five private residential and commercial projects. When construction companies become insolvent, a host of tricky legal and practical issues come into play.

A bleak picture

The High Court has recently considered and allowed the application of an opposing creditor to extend the time allocated for the hearing to sanction a restructuring plan under Part 26A of the Companies Act 2006. David Garner reports on the sanction hearing below.

The October 2023 insolvency statistics show that company insolvencies have risen by 17.6% from October 2022 to October 2023 and by 56.7% since pre-pandemic levels in October 2019. Total insolvencies have reached the highest levels since 2009.

In its much-anticipated 2023 Autumn Statement, the UK Government has committed to extending the relief available to the hospitality, retail and leisure sector. It has also announced that a business rates support package worth £4.3 billion will be available to support small businesses and the high street. However, the hospitality sector remains one of the most vulnerable, and it remains to be seen whether this additional support will be enough.

The pilot measure for mutual recognition and assistance of insolvency proceedings between the courts of three pilot areas in Mainland China and Hong Kong was agreed in mid-2021, which is known as the Cooperation Mechanism.

Since then, liquidators in Hong Kong have had a more certain and structured route to seek, through Hong Kong Court, recognition and assistance from the designated Mainland courts in the three pilot areas including Shanghai, Shenzhen and Xiamen.

Key Takeaways

An analysis of recent statistics show what the Insolvency and Tax Disputes teams at Mishcon de Reya have long experienced – that HMRC is not in the habit of overlooking an outstanding debt.