Introduction

We recently commented on a Scottish case involving dissolution, disclaimer and restoration (read our Law-Now here). There has now been an English case raising the same issues which on the face of it analyses the same provisions of the Companies Act 2006 (UK wide legislation) in a different way to achieve the same result.

The approach of the courts

Key Point

The High Court has given some guidance on the effect of an order to restore a dissolved company to the register where a secured creditor has rights against that company and there has been a disclaimer by the Crown.

Facts

Key Point

Judgment sets out the rationale behind validating three payments made by a Company after the presentation of a winding up petition.

The Facts

This was the third application made by Sahaviriya Steel Industries UK Limited (the “Company”) in connection with payments made that would require validation under s127 Insolvency Act 1986. The payments were necessary to keep part of its business going pending discussions on sale or restructuring.

The Decision

Key Points

• Court considers the ownership of assets situated at premises owned by the bankrupt in the context of limited relevant evidence
• Court emphasises the importance of joining the correct parties to litigation

The Facts

One of the changes introduced by the Small Business Enterprise and Employment Act 2015 (“SBEE”) which came into force on 1 October 2015 was to allow administrators and liquidators the right to assign their rights of action in respect of fraudulent trading claims, wrongful trading claims, transactions at an undervalue, preferences and extortionate credit transactions.

On 22 April 2015, the Supreme Court handed down its decision in Jetivia SA v Bilta (UK) Limited, unanimously holding that where a company has been the victim of wrong-doing by its directors, that wrong-doing should not be attributed to the company so as to afford the directors an illegality defence.

The result is clear and not a surprising one. The judgments are less clear however. The Court highlighted the difficulties in developing illegality principles of general application for future cases, but then decided now was not the time to try.

October 2016 will see the Third Parties (Rights against Insurers) Act 2010 finally brought into force. Although five years since it passed through Parliament, the act has never received Royal Assent due to a number of practical hurdles.

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Here the Court of Appeal granted an injunction which restrained a building contractor (Harbour View) from presenting a winding-up petition, overturning the high court's decision at first instance.  Harbour View had been engaged under two separate contracts based on a JCT Intermediate WCD (2011) to carry out works at two separate sites.  The employer (Wilson) failed to pay against two interim certificates (August 2013 and September 2013), leaving a sum of over GBP 1.6 million owing.

The High Court has recently considered whether directors were in breach of their duties after a company entered insolvency. Specifically, the Court considered whether it could exercise its discretion in accordance with section 212 of the Insolvency Act 1986, whereby the Court can order summary judgment against an officer of the company who has misapplied, retained or become accountable for money or property of the company, or been guilty of any misfeasance or breach of fiduciary or other duty in relation to the company.

The Claim