Particularly in smaller external administrations, the court will not blindly accept time-based remuneration as reflecting the value of the work, but will consider the proportionality of the remuneration.

In a number of recent judgments, the courts appear to be favouring considerations of proportionality coupled with an assessment of the realisations achieved when assessing application for the approval of remuneration for external administrators.

The law of "shadow directors" means that a person who effectively controls a board of a company, even though that person is not a director, may find himself being legally classified as a director of the company. That carries with it the threat of legal liability for the company's insolvent trading debts in the event that the company goes into liquidation.

Any legislation or action which seeks to alter the pari passu distribution of an insolvent company's property amongst its creditors needs to be very carefully and comprehensively considered, and have regard to accrued rights and interests.

The decision in In the matter of Independent Contractor Services (Aust) could mean more reliance upon fair entitlements guarantee funding provided by the Commonwealth in relation to the liquidation of trading trusts.

Key Points:

Although they should always keep time-frames very much in mind, the decision in BKA Practice Co Pty Ltd gives liquidators greater scope to find all possible time-frames in which they have to work.

Key Points:

Section 562A of the Corporations Act does not apply where liquidator realises a sum of money by assigning the proceeds of the reinsurance claim to a third party.

Liquidators of insurance companies face a major quandary when assessing reinsurance recoveries.

A new Court decision may undercut the legislative policy that reinsurance proceeds should be quarantined from the normal rules for paying out creditors of insolvent companies.

The Supreme Court decides how client moneys are to be allocated in the Lehman estate, which has far-reaching implications for distributions in other financial collapses.

The Supreme Court has recently handed down a decision in a contentious and difficult application in the Lehman administration, a decision which fundamentally affects the allocation of client moneys in the Lehman estate.

The Court of Appeal handed down its judgment on 14 October 2011 unanimously upholding the first instance decision that a Financial Support Direction (FSD) issued by the Pensions Regulator to an entity after it has commenced insolvency proceedings will rank as an expense of the administration, therefore affording it super-priority over floating charge holders and other unsecured creditors. This decisions has significant implications for lenders to groups with UK defined benefit pension plans if any of their security is taken as a floating charge.

There are essentially three types of insolvency proceeding: liquidation, receivership and administration. Liquidators realise and distribute a company’s assets before dissolving the company. Receivers usually realise certain secured assets to repay certain debts, before appointing a liquidator. However, an administrator’s first objective is to rescue the company as a going concern. It is only if this is not practicable that the administrator can realise and distribute a company’s assets.

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