The Facts

Mr Brown was declared bankrupt on 12 May 2016, following possession proceedings and costs order against him which had not been paid. Mr Brown did not accept that the original litigation leading to his bankruptcy was valid, and as a result did not accept that the bankruptcy proceedings were valid either. Mr Brown represented himself at all hearings and refused legal representation or assistance.

In a year fast becoming dubbed the “year of the CVA” in the retail sector, there was a cautionary tale for insolvency practitioners following the recent High Court judgment in Re SHB Realisations Ltd (formerly BHS ltd (in liquidation).

The timeline of the case

Carillion, the UK’s second largest construction company, entered compulsory liquidation on 15 January 2018, with estimated debts of £1.5bn and a pension deficient of c£800m, following three profit warnings in 2017. The company employs 20,000 people in the UK and 43,000 people worldwide. It is thought that some 30,000 companies may be affected by the liquidation.

In the decision in Mohammed Safier and (1) Wendy Jane Wardell & David John Standish (Joint Trustees in Bankruptcy of Mohammed Safier) (2) The Official Receiver the High Court made a potentially far-reaching decision on the payment of Secretary of State fees in certain annulment applications. Sue Austin considers the judgment.

In LRH Services Ltd (in Liquidation) v Raymond Arthur Trew (1) Jason Marcus Brewer (2) and Derek O'Neill (3) [2018] EWHC 600 (Ch), LRH Services Ltd (LRH), acting by its liquidators, brought claims for breach of duty against three former directors. The claims arose from a reorganisation in 2009. LRH did not trade but had two trading subsidiaries (R and E) and it was wholly owned by CSGH, which also had another subsidiary in addition to LRH, CSG. Two of the directors of LRH were substantial shareholders in CSGH.

The reorganisation

Toone v Robbins 2018 [EWHC] 569 (Ch)

The lessons to takeaway

Directors who are also shareholders need to be careful when arranging how to take payments from a company. For tax reasons, dividends can be perceived to be an attractive way to take cash out of a company, but if there are insufficient distributable reserves, such payments are unlawful and can be clawed back.

The High Court held that "final determination" signifies the very last stage of any proceedings, without the chance to appeal. Sberbank were therefore still bound by their undertaking to take no further steps in an arbitration against the Company.

This article was first published in Butterworth's Journal of International Banking & Financial Law. To access a copy click here. 

Key Points

In January this year, construction giant Carillion entered into liquidation. In a sense its demise was sudden – the firm entered straight into liquidation rather than the more familiar administration procedure, meaning it had no meaningful assets that gave any prospect of the business, or any part of it, continuing as a going concern. But in another sense it was expected: a large failure of this type had been expected by industry watchers for some time.

The Supreme Court has recently held that directors who have caused company property to be transferred to another company under their control may be liable to restore the proceeds even after expiry of the six-year limitation period.

Mr and Mrs Fielding were directors and majority shareholders of Burnden Holdings (UK) Ltd ("BHUK"), a holding company with trading subsidiaries including Vital Energi Utilities Ltd ("Vital Energi").