The judgement in BHL v Leumi ABL Limited [2017] EWHC 1871 (“BHL”) has been seen by many as another example of courts enquiring more readily into commercial terms agreed by large corporate entities and scrutinising the exercise of contractual powers.

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.

When goods are delivered to a professional storage operator (“Warehouseman”) for safe keeping or storage, it is usual practice that the parties will enter into express terms which often contain a right of lien in favour of the Warehouseman. The benefit of having an express right of lien is that the terms are clear and unequivocal, especially those relating to enforcement of the lien and sale of the assets.

The Court of Appeal recently made an important decision on the equity of exoneration in the case of Armstrong (As Trustee In Bankruptcy Of Onyearu) V Onyearu & Anor (2017).

Procedural framework

Paragraphs 49 to 55 of Schedule B1 to the Insolvency Act 1986 provide the statutory framework within which administrators seek approval of their proposals.

An administrator must make a statement setting out proposals for achieving the purpose of the administration within eight weeks of the company’s entry into administration and the administrator must seek a decision from the company’s creditors as to whether the creditors approve those proposals or not.

The Court of Appeal, in the case of Grant & Another v Baker & Another [2016] EWCH 1782 (Ch), has held that a judge had been wrong to postpone an order for possession and sale of a matrimonial home indefinitely due to the postponement being incompatible with the underlying purpose of bankruptcy legislation.

Background

A question which the court was asked to consider recently was:

Does a conditional fee agreement continue to apply if the claim is amended part way through the proceedings?

Following obiter comments in the recent Court of Appeal decision in JCAM Commercial Real Estate XV Limited v David Haulage Limited[1]practitioners must now review their stance on the use of a Notice of Intention to Appoint Administrators (“NoI”) where there is no qualifying floating charge holder (“QFCH”). This is a blow to the flexibility of the administration process as a rescue procedure.

The Court of Appeal, in the case of Harvey v Dunbar Assets plc [2017] EWCA Civ 6, has held that it constitutes an abuse of process for a debtor to seek to set aside a second statutory demand on the basis of an argument previously raised and dismissed by the Court on its merits.

The background

Last years decision of the High Court in Kean v Lucas (Re J&R Builders (Norwich) Ltd) [2016] EWHC 2684 (Ch)puts into further context a number of cases concerning the rights of creditors to requisition a meeting to replace a creditors’ voluntary liquidator (or by analogy officeholders generally). But does it provide any answers?

References below to ‘Sections’ or ‘Rules’ are references to the Insolvency Act 1986 and Insolvency Rules 1986 respectively.

The Law at a Glance