On 1 October 2015, several changes to UK insolvency legislation are coming into force. Insolvency practitioners and stakeholders should take note of the following key amendments to make sure they are up to date with these changes.
KEY POINTS
Following on from our recent blog on ‘How the UK General Election Might Influence the Recast Insolvency Regulation’ and whether the UK will still be part of the EU in 2017 when it comes into force, we consider the ‘hokey cokey’ of the upcoming EU referendum.
San Bernardino’s Chapter 9 case is back in the news. On May 18, the City Council approved the City’s proposed exit plan for filing with the Bankruptcy Court in a 6 to 1 vote. San Bernardino’s plan is challenging to say the least and certainly consistent with Judge Jury’s January comment that “sometimes you have to get ugly to get pretty.” The plan reflects the City’s “Gordian Knot” of financial obligations to bondholders, employees and retirees, and the City’s need to deliver essential services to residents without raising taxes beyond the breaking point.
In the recent case of Wilson (as liquidator of 375 Live Ltd) v SMC Properties Limited, the English High Court reviewed the policy behind section 127 Insolvency Act 1986 (“the Act”) and the underlying principles that apply to validation order applications.
The facts are as follows: an insolvency creditor challenged the decision of the administrator in bankruptcy of a company about not recognizing its credit. The credit derived from a guarantee granted to secure a promissory note from a company belonging to the group of the insolvent company.
On February 6th, Federal District Judge Francisco Besosa ruled that Puerto Rico’s municipal debt-restructuring law, the “Recovery Act”, was unconstitutional stating that: “The Recovery Act is pre-empted by the federal Bankruptcy Code and is therefore void.” The Court also permanently enjoined current and future government officials from enforcing the Act. Puerto Rico has announced that it will be appealing the ruling.
Put your lender’s hat on. Wouldn’t it be great if you could prevent your borrower from filing bankruptcy in the first place? Unfortunately for lenders, a recent decision demonstrates how hard it is to prevent bankruptcy filings.
The vast majority of UK taxpayers pay what they owe in full and on time. Her Majesty’s Revenues and Customs (HMRC) thinks that a persistent minority choose not to pay which provides an undeserved advantage to those who are wilfully seeking to play the system, and creates costs which are ultimately borne by the compliant majority.
In Re Lehman Brothers International (Europe) (in administration) and others [2014] EWHC 704 (Ch), the High Court ruled on issues regarding the order of distributions and payments in the administration and potential liquidation of various Lehman entities. This wide-ranging judgment gives clarity on a number of previously uncertain issues.