Secured creditors with an unsecured shortfall cannot claim a share of the prescribed part of the floating charge realisations set aside for unsecured creditors under Section 176A of the Insolvency Act 1986. This applies whether the secured creditor is the holder of a fixed or a floating charge (or both).

The retail sector and its suppliers operate at the sharp end of the economy and feel the impact of tighter consumer spending with more immediacy than most other sectors.

Summary

The Case

This is the first time that the HGCRA has reached the House of Lords. The dispute here, which related to the payment part of that legislation, highlighted the tension between an employer’s payment obligations and the impact on those obligations of the contractor going into administration. Here, on 2 May 2003, Melville applied for an interim payment. No withholding notice was served. The final date for payment was 16 May 2003. Wimpey did not pay, but on 22 May 2003 administrative receivers were appointed.

In a judgment useful to insolvency practitioners, a court has recently confirmed that liquidators are not personally liable for payment of dividends. In Lomax Leisure v Miller and Bramston [2007] EWHC 2508 (Ch) Miller and Bramston faced personal claims on dividend cheques they had cancelled, after receiving a pending application from a creditor whose claim they had rejected. Miller and Bramstom were later replaced by a new liquidator who brought claims in the name of the company and various creditors.

Background

Insolvency of a contractor or a sub-contractor during the course of a building project has the potential to incur other parties involved in the project in considerable costs.

Here are some of the things to bear in mind in case a contractor or sub-contractor becomes insolvent.

It is over 10 years since the House of Lords decision in the case of Sharp v Thomson (1997 SC (HL) 44) threw a judicial cat amongst the pigeons of property and insolvency law in Scotland. The House of Lords, overturning decisions of both the Outer and Inner Houses of the Court of Session, decided that ownership of a property passed unencumbered by, in this case, a crystallised floating charge, even though the disposition of that property (which had been delivered before the floating charge crystallised) had not yet been registered in the Property Register.

The case of Law Society v Dixit Shah (2007) EWHC 2841 (Ch) arose from the intervention of the Office for the Supervision of Solicitors into an association of firms owned by Dixit Shah which traded under "the BJ Brandon Group" name. The Law Society alleged that the OSS discovered that around £12.5 million of client money had been misappropriated by Mr Shah.

This Act received Royal Assent in July 2007 but no date for implementation has been published yet.

In addition to the provisions contained in this Act aimed at improving the working of the tribunals system and increasing judicial diversity, are several sections that will be of interest to financiers and insolvency professionals: