A company enters into compulsory liquidation when the court makes a winding up order. Upon the order being made, the Official Receiver ("OR") is automatically appointed as liquidator, however, the company's creditors may nominate an alternative licensed insolvency practitioner to act as liquidator. A liquidator's primary function is to realise the company's assets for the benefit of its creditors.

In light of the business news over the last year, including the most current news of Carillion, it is important to know how business failure impacts on employment rights.

Summary: This Expert Insight looks at the case of Ziggurat (Claremont Place) v HCC International Insurance Company PLC [2017] and considers the implications of the case for the surety industry generally, particularly in the context of construction insolvency.

Since the case of Perar BV v. General Surety and Guarantee in 1994, there has been some confusion and misunderstanding as to the implications of this case and whether insolvency amounts to a breach of contract, or more importantly, if it needs to be, when claiming on a performance bond.

This was recently discussed in the case of Ziggurat (Claremont Place) LLP v HCC International Company Plc just before Christmas.

Background

English courts recognise that shareholders hold a separate legal personality from the body corporate they own a stake in and will only go behind the corporate veil in limited circumstances. In the recent case of Onur Air Taşimacilik AŞ v Goldtrail Travel Ltd (In Liquidation) 1 , the Court of Appeal considered whether the financial means of the appellant’s wealthy controlling shareholder could be taken into account when making an order that the appellant had to make a substantial payment into court as a condition of being able to pursue its appeal.

The raft of European and domestic litigation surrounding Mastercard fees has been long running and frankly, brain achingly complex. Hidden in the masses of litigation, the topic has sparked little interest in insolvency practitioners. However, it has the potential to generate realisations in liquidated estates where there may otherwise be nothing to offer creditors, and it warrants attention as a result.

The collapse of the UK’s second largest construction company, Carillion, was not particularly surprising given recent profit warnings and debts believed to be in the region of £1.5 billion.

What happened to Carillion

Clydesdale Bank Plc v. (1) R Gough (t/a JC Gough & Sons) (2) Anne Michelle Gough [2017] EWHC 2230 (Ch)

 (1) Citicorp Trustee Company Limited and (2) Golden Belt Sukuk Company BSC v. (1) Maan Al-Sanea and (2) Saad Trading, Contracting and Financial Services Co [2017] EWHC 2845 (Comm)

In this case, the High Court considered whether valid service had been effected upon two defendants based outside of the jurisdiction who had shown no willingness to be involved in the proceedings.

In Hellas Telecommunications (Luxembourg) [2017] EWHC 3465 (Ch), the High Court ordered respondent liquidators to disclose the identity of third-party litigation funders and the terms on which funding was provided in order to facilitate an application for security of costs.

Facts