Original news
Mikki v Duncan [2016] EWCA Civ 1312, [2017] All ER (D) 157 (Feb)
Summary
A bankrupt was found to be in contempt of court following years of failing to comply with the terms of multiple court orders compelling him to disclose information about his financial affairs with a view to entering into an IPOA.
The Facts
The Facts
Husband and wife petitioned for divorce in 2008. In January 2009, a statutory demand was served on the husband and a bankruptcy petition was presented in March 2009. In June 2009, husband and wife agreed a consent order whereby the husband was to make periodical payments to the wife and daughter and to repay around £1.4m to the wife.
Summary
The UK Court of Appeal recently confirmed that lawyers (Decherts) could no longer act for a company (Avonwick). Our views on the first instance decision can be found here.
Background
Kazakhstan Kagazy Plc v Zhunus [2016] EWCA Civ 1036 – Court of Appeal
A group of companies brought proceedings against their former chairman (“Mr Zhunus”), CEO (Mr Arip”) and former director (“Mr Dikhanbayeva”) for misappropriation of their assets.
It is standard market terms for a lender to have the express right to transfer its loan. In particular, English law governed syndicated loan documents will usually incorporate the Loan Market Association (LMA) wording (or similar) to this effect. Interestingly, the Court of Appeal has recently had to consider the scope for implying terms into such LMA-style language and whether to restrict a lender’s right to market the sale of the loan under those standard terms.
A Trustee in Bankruptcy is granted a wide statutory power under section 366 of the Insolvency Act 1986 (“the Act”) to ask the Court, at any time after the Bankruptcy Order has been made, to privately examine any person believed to be in possession of the Bankrupt’s “property” or of information relating to his affairs, to assist with his or her statutory investigations.
There have been a number of decisions over the past decade concerning the interpretation of section 310 of the Insolvency Act 1989 (“IA 1986”) together with section 11 of the Welfare Reform and Pensions Act 1999 (“WRPA”) in respect of whether a trustee in bankruptcy has the ability to compel a bankrupt to draw down payments from his personal pensions where he was eligible to make such an election but had not done so.
The legal position
On 11 October 2016, the High Court10 held that statutory interest payable on an insolvency (under rule 2.88(7) IR 1986) is not “yearly interest” for UK tax purposes. Such statutory interest is therefore not subject to UK withholding tax (20%).
The facts of the case are somewhat unusual in that there was a substantial surplus in the administration and the statutory interest was estimated at £5bn. However the decision is a welcome clarification of the position. It also confirms HMRC’s previous guidance on the taxation of statutory interest (subsequently withdrawn).