When a company goes into administration, time does not stop running against its creditors' claims for the purposes of the Limitation Act 1980. This is different to where a company goes into liquidation as time does then stop running. The effect there is that the claim stays live whereas in an administration, once the limitation period has expired, the claim is time-barred.

Guidance published by HMRC in its Corporate Finance Manual has recently been updated to reflect a change in practice regarding the corporation tax treatment of debt for equity swaps.

Debt for equity swaps are commonly used in corporate restructuring, particularly when a company is in financial difficulty. They may also be encountered in the termination of joint venture arrangements where, prior to the sale of shares in the joint venture company by one co-venturer to the other, the parties wish to convert any loans made to the company into shares.

Insolvency procedures involving companies are complex and generally take a long time to complete. There is plenty of jargon which adds to the confusion, whereas all that an unsecured creditor usually wants to know is how to make a claim for the monies owed to him by the company, to whom the claim should be made, how long it will take to decide the claim and whether there is a possibility of recovering any monies from a company which is obviously experiencing financial difficulties.

The court will not review a bankruptcy order where there has been no material change and evidence subsequently adduced could have been available at the original hearing.

In the present fi nancial climate, customers are increasingly asking for business critical software or other assets to be transferred to the customer should the supplier become insolvent, for the legitimate reason that the customer needs security of supply. Two recent Court of Appeal cases remind us that customers who outsource to and contract with potentially vulnerable service providers need to take account of the “anti-deprivation principle” when doing this.

Scottish Lion appealed against a judgment delivered by Lord Glennie in which the petition for the proposed scheme of arrangement was dismissed (see our previous blog entries http://www.insurereinsure.com/BlogHome.aspx?entry=1910 and http://www.insurereinsure.com/BlogHome.aspx?entry=1985).

The SFO has announced that managing director and shareholder of Alta Gas Plc, Peter Brian Bradley, has been ordered to pay £1 million compensation to victims following confiscation proceedings on 26 January 2010. In 2001, Alta Gas Plc went into administrative receivership which resulted in the receivers of the company discovering a sophisticated system of false accounts that enhanced the profitability of the company.

An agreement with a company has gone into arrears. The vehicles may or may not have been sold. The company has placed itself into voluntary liquidation. Can the finance company take steps to protect itself if it suspects that there has been mismanagement or misappropriation of funds within the company? Yes. Where "prejudice" will be suffered by a creditor, the court can order a compulsory liquidation, where the activities of the company will be more vigorously examined than might otherwise be the case with a voluntary liquidation.

Where "prejudice" is suffered by a creditor or contributory, the court can order a compulsory liquidation despite a voluntary liquidation having already been entered into.

Following up on our previous blog on Lord Glennie's controversial decision in the Scottish Lion solvent scheme of arrangement we can now report that last week the scheme was formally dismissed.