In light of the business news over the last year, including the most current news of Carillion, it is important to know how business failure impacts on employment rights.
Summary: This Expert Insight looks at the case of Ziggurat (Claremont Place) v HCC International Insurance Company PLC [2017] and considers the implications of the case for the surety industry generally, particularly in the context of construction insolvency.
Since the case of Perar BV v. General Surety and Guarantee in 1994, there has been some confusion and misunderstanding as to the implications of this case and whether insolvency amounts to a breach of contract, or more importantly, if it needs to be, when claiming on a performance bond.
This was recently discussed in the case of Ziggurat (Claremont Place) LLP v HCC International Company Plc just before Christmas.
Background
English courts recognise that shareholders hold a separate legal personality from the body corporate they own a stake in and will only go behind the corporate veil in limited circumstances. In the recent case of Onur Air Taşimacilik AŞ v Goldtrail Travel Ltd (In Liquidation) 1 , the Court of Appeal considered whether the financial means of the appellant’s wealthy controlling shareholder could be taken into account when making an order that the appellant had to make a substantial payment into court as a condition of being able to pursue its appeal.
The collapse of Carillion, plus the publication of the National Audit Office’s (NAO) timely and perceptive report (www.nao.org.uk/wp-content/uploads/2018/01/PFI-and-PF2.pdf) on private finance initiatives (PFI) and Private Finance 2 (PF2), has sparked renewed public focus on the impact of such events on government finances. This has led to some scaremongering from the media:
‘PFI deals costing taxpayers billions.’ BBC, January 18
The raft of European and domestic litigation surrounding Mastercard fees has been long running and frankly, brain achingly complex. Hidden in the masses of litigation, the topic has sparked little interest in insolvency practitioners. However, it has the potential to generate realisations in liquidated estates where there may otherwise be nothing to offer creditors, and it warrants attention as a result.
(1) Citicorp Trustee Company Limited and (2) Golden Belt Sukuk Company BSC v. (1) Maan Al-Sanea and (2) Saad Trading, Contracting and Financial Services Co [2017] EWHC 2845 (Comm)
In this case, the High Court considered whether valid service had been effected upon two defendants based outside of the jurisdiction who had shown no willingness to be involved in the proceedings.
Carillion is, or was, the second largest construction firm in the UK. It’s collapse on Monday 15 January 2017 was confirmed when the High Court ordered the compulsory liquidation of the various companies in the group. It employed 20,000 people and the projects of the business included the HS2 rail project, Battersea Power Station redevelopment, military contracts and the maintenance of schools, prisons and hospitals. So, what happens now?
With the news of major government contractor Carillion's liquidation, we look at the practical steps public bodies should be taking if Carillion is one of their contractors or is part of their supply chains so as to ensure there is as little disruption as possible across their service areas.
Contract review
In Hellas Telecommunications (Luxembourg) [2017] EWHC 3465 (Ch), the High Court ordered respondent liquidators to disclose the identity of third-party litigation funders and the terms on which funding was provided in order to facilitate an application for security of costs.
Facts