In the current economic climate, brokers will find the decision of the High Court in Euroption Strategic Fund Limited v Skandinaviska Enskilda Banker AB[2012] EWHC 584 (Comm) of considerable interest, since it considers the duties of a broker who is conducting a close out and liquidating the position of a client who is in a state of default, in this case for failure to meet margin requirements.   

The Court ruled that:

The Bankruptcy Law, applicable to FIEs and most other companies in China, will come into effect on 1 June 2007.

The Bankruptcy Law sets out a dual test of insolvency: inability to pay debts as they fall due ("cash flow insolvency") and insufficient assets to pay off all debts ("balance sheet insolvency"). Either a debtor or a creditor may apply to the court for reorganization or liquidation of the debtor. Court assistance may also be sought to conciliate.

On 10 December 2010, the High Court gave judgment in a joint application by the administrators of certain companies in the Nortel and Lehman estates for directions on the status of any financial support direction (FSD) or contribution notice (CN) issued to the companies in administration or any subsequent liquidation (Bloom & Others v. The Pensions Regulator (Nortel, Re) [2010] EWHC 3010 (Ch)).

A claim by trustees against an insolvent participating employer (who has ceased to participate in the pension scheme) for its share of the scheme deficit is a contingent obligation at the date of winding up and is admissible in the winding-up. This follows the decision by the Outer House of the Court of Session in Scotland in Burton, Re Direction of Assets [2010] CSOH 174.

The Singapore High Court has considered for the first time whether an action brought to avoid transactions that allegedly violated insolvency laws should be stayed in favour of arbitration. The court held that such disputes are not suitable for arbitration due to the public interest involved.

In Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) v Larsen Oil and Gas Pte Ltd [2010] SGHC 186 the Singapore High Court considered whether an action brought to avoid transactions that allegedly violated insolvency laws should be stayed in favour of arbitration.

In the current economic climate, LLPs and their members are being forced to grapple with insolvency legislation. Applying the provisions of the corporate insolvency regime established by the Insolvency Act 1986 to LLPs is not straightforward. One of the issues is whether an individual member can apply to wind up an LLP.

In brief

Courts have recently approved a number of means by which external administrators can realise value from insolvent agricultural managed investment schemes and deal with the rights of growers and sponsor creditors:

In August we reported that the Court of Appeal had expressed doubts as to whether the EAT in Oakland v Wellswood was right to suggest that pre-pack administrations could be insolvencies "begun with a view to liquidation" (so that TUPE does not apply to transfer employees).

Introduction

The New South Wales Supreme Court has found a solicitor liable for facilitating unlawful ‘phoenix’ activity.1 Phoenix activity consists of transferring business assets out of an old debt-laden company (which subsequently goes into liquidation) to a new debt free company. The new company carries on the business of the old company; but the assets are put beyond the reach of the creditors of the old company.