Following an informal consultation in late 2008, the DWP is now consulting formally about changes to the Employer Debt Regulations made under s75 Pensions Act 1995. The consultation document can be found at www.dwp.gov.uk/consultations/2009.

The main proposed changes are intended to facilitate corporate restructurings, but other changes are designed to address some technical problems with the Regulations.

Corporate restructurings

Background

In In the matter of Nexus Energy Ltd (subject to a deed of company arrangement) [2014] NSWSC 1910, the deed administrators of Nexus Energy Limited (subject to a Deed of Company Arrangement) (Nexus) sought leave of the Court to transfer all ordinary shares in Nexus to SGH Energy (No 2) Pty Ltd (SGH2). SGH2 was the proponent of the Deed of Company Arrangement (DOCA) and was also associated with the secured lender.

In the recent decision, In the matter of Mirabela Nickel Ltd (subject to deed of company arrangement) [2014] NSWSC 836, the NSW Supreme Court has granted leave to the deed administrators under section 444GA of the Corporations Act 2001 (Cth) (Act) to transfer 98.2% of the existing shares of Mirabela Nickel Ltd (Mirabela) to unsecured creditors without the consent of its shareholders.

FACTS

The anti-deprivation principle provides that “there cannot be a valid contract that a man’s property shall remain his until his bankruptcy, and, on the happening of that event, go over to someone else, and be taken away from his creditors”.

In September 2009 we reported on the first instance decision in Butters and ors v BBC Worldwide Ltd and ors, accessible here in which the Court held that contractual provisions in a joint venture agreement taken together with termination provisions in a licence of IP rights were void since the effect of those provisions on insolvency was to deprive creditors' access to assets and therefore contrary

Unique nature of UAE property market

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.

In Butters and ors v BBC Worldwide Ltd and ors, decided on 20 August 2009, the Court held that contractual provisions in a joint venture agreement taken together with termination provisions in a licence of IP rights were void since the effect of those provisions on insolvency was to deprive creditors access to assets and therefore contrary to public policy in the light of insolvency laws.

BUSINESS IMPACT

Following the rejection of Stylo's proposed CVA earlier this year and the successful "unfair prejudice" challenge of Powerhouse's CVA in 2007, the recently approved CVA proposal put forward by JJB Sports, widely described by commentators as "ground-breaking", has generated significant interest in the CVA process and the use of a CVA to effect a solvent restructuring of a listed company without resorting to administration and a suspension of trading in its shares.

The Sinclair v Versailles1 decision has extinguished any prospect that a victim of a fraud has a proprietary claim to a fraudster’s secret profits. It also offers significant comfort to banks, insolvency practitioners and other potential recipients of trust funds by setting a high bar for whether a recipient person is “on notice” of a proprietary claim to those funds.