The joint report from two parliamentary committees in respect of the City Link administration, concluding that the current system is too heavily skewed in favour of investors over workers, demonstrates the difficulty that directors have in the run up to an insolvency process. Neil Smyth, partner in the Restructuring & Corporate Recovery practice at international law firm Taylor Wessing, explains:

Just before Christmas last year, the High Court handed down a judgment in a bankruptcy case which was contrary to a High Court decision in a previous pensions and bankruptcy case on essentially the same issues. It has left this area in some uncertainty for the time being and is the latest in a long history of developments in this area.

A little bit of history

The Singer & Friedlander Limited Pension and Life Assurance Scheme (the "Scheme") first came to general notice in relation to a case arguing whether the section 75 debt can be subject to a set off due to events after the time from which the relevant figures used in the calculation arose (read our article on Disputed section 75 debt claim).

Key Point

Her Majesty's Revenue & Customs ("HMRC") were not immune from the requirement to give an undertaking for damages suffered where a provisional liquidator was appointed based on HMRC allegations of fraud and tax evasion.

The Facts

Key Point

The mere fact that the law of the country in which an asset is situated does not recognise the trust concept does not necessarily invalidate the trust at least as far as English Courts are concerned.

The Facts

Key point

Claimants should ensure that in foreign as well as UK insolvency procedures their claims are protected against limitation defences.

Facts

Key Point

The Court of Appeal has overturned a first instance decision (discussed in our April 2014 Update) that the Companies Court should not normally make an order upon a winding up petition based on tax assessments that are under appeal.

The Facts

Key point

Pensions in payment were within the ambit of section 310(7) of the Insolvency Act 1986 (the "Act"), but pensions not in payment were not payments to which a bankrupt was “entitled” as the right to draw had not been excerised. The court therefore refused to make an income payments order ("IPO").

The Facts

Key Points

• Paragraph 13 of Schedule 4 to the Insolvency Act 1986 ("Paragraph 13") permits a liquidator to do all acts "necessary" for the winding up and distribution of property.
• The decision as to what action is "necessary" is one for the liquidators (albeit subject to sanction).
• Nothing in FSMA 2000 prevented the investors from assigning their claims against the former operators..

The facts

Key Point

The Court has given guidance on when a company in administration has possession of third party assets allowing an administrator to apply for an order allowing him to sell them.

The Facts

The administrators of a company applied to Court under paragraphs 72 and 68 of Schedule B1 to the Insolvency Act 1986 for permission to sell assets located on its freehold premises pursuant to a chattel hire contract with a group company (the "Assets").

The Decision