The recent decision of the English High Court in the case of Fry v Sherry [2012] (In the matter of Ruscoe Ltd (In Liquidation)) serves as a timely reminder of the potential personal liabilities faced by directors should they breach their fiduciary duties.
Summary of the facts
Philip Jones explains that recent cases have confirmed the need for insolvency office holders, and those appointing them, to take great care to ensure that the appointments are valid.
As was described in our article Invalid Liquidation Appointments the appointment of an insolvency office holder can be fraught with difficulties.
Bilta (UK) Ltd in liquidation) & others v Muhammad Nazir & others [30.07.12]
High Court refuses to accept that a claim by an insolvent one-man company against its director for breach of his duties would be barred by ex turpi causa.
Bilta had two directors, one of whom owned all the company’s issued shares, effectively making it a "one-man company". The directors used Bilta to perpetrate a huge VAT fraud which left the company owing £38 million to HMRC. As a result, it was placed into insolvent liquidation.
In a case with truly global implications, the Supreme Court of England and Wales held earlier today that judgments of U.S. Bankruptcy Courts against foreign defendants who had not submitted to the Bankruptcy Court’s jurisdiction were not enforceable in England and Wales in the case of Rubin v. Eurofinance SA.
Factual Background
Important clarification was provided today to the insolvency world as the UK Supreme Court in the conjoined appeals in Rubin and New Cap rejected the modified universalist doctrine that established common law rules as to the enforcement of foreign judgments do not (or should not) apply to insolvency orders.
The UK Supreme Court has handed down an important judgment in the conjoined cases of Rubin and another v Eurofinance SA and others and New Cap Reinsurance Corporation (in Liquidation) and another v AE Grant and others [2012] UKSC 46, which provides vital clarification on the effect of foreign insolvency judgments on the UK courts. The judgment was handed down yesterday.
Background & Court of Appeal
When a tenant goes into liquidation and its liquidator surrenders the lease what effect does this have on any obligations to remove any alterations that the tenant has made during the term and generally reinstate? The high court has recently decided that the terms of a surrender that released both parties from rights arising “on or after, but not before, the date of this surrender” were sufficient to release the tenant from its obligations to reinstate the premises because these obligations were future obligations.
Summary
The recent judgment of the Supreme Court in the joined cases of Rubin and another v Eurofinance SA and others and New Cap Reinsurance Corporation (in liquidation) and another v A E Grant and others [2012] UKSC 46, issued on 24 October 2012, established that judgments avoiding pre-bankruptcy transactions (“avoidance judgments”) made by non-EU foreign courts (including U.S. bankruptcy courts) have no special enforceability status in England and Wales compared to ordinary judgments.
- Jackson reforms will go ahead in April 2013
The new Master of the Rolls, Lord Dyson, has confirmed that the Jackson reforms will come into force in April 2013, scotching rumours that the legislative process would not be completed in time. He emphasised the importance of the Court of Appeal's role in implementing the reforms, maintaining consistency and minimising satellite litigation, urging the court to "speak clearly through [its] judgments in explaining how the reforms are intended to operate". He also described the issue of costs management
In Rubin v Eurofinance SA [2012] UKSC 46, the Supreme Court (by a majority of 4 to 1) reversed the Court of Appeal’s unanimous decision and held that the English court would not enforce a judgment made by the New York court in insolvency proceedings to which the defendant did not submit.