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 It also confirms HMRC’s previous guidance on the taxation of statutory interest (subsequently withdrawn).
On 29 November 2016, the First-tier Tribunal9 held that the issue of growth shares to certain key employees had inadvertently caused an existing class of ordinary shares to carry a preferential right to assets on a winding up. The effect of this was that both prior ordinary share issues, and future share issues, failed to meet the requirement of the Enterprise Investment Scheme (EIS) rules.
The Football League has announced the toughening up of its insolvency rules. Football League clubs will face stricter sanctions and be forced to repay the majority of their debts to unsecured creditors under new rules agreed at the competition’s annual conference.
Parties in the construction sector seeking to enforce an adjudicator’s decision against a
company with the benefit of a statutory moratorium were given fresh guidance in the recent case of South Coast Construction Ltd v Iverson Road Ltd [2017] EWHC 61.
Facts
In September 2013 Iverson Road Ltd (“Iverson”) engaged South Coast Construction Ltd (“SCC”) to complete various building works in London. In June 2016 SCC halted the work for non-payment of sums due by Iverson.
Legislation soon to take force creates a new special administration regime for private providers of social housing, introducing changes that will transform restructuring in the sector.
Summary
The insolvency legislation contains an unusual provision pursuant to section 375(1) of the Insolvency Act 1986 enabling the court to review its own decision. The issue in this case was whether the High Court could review its own decision where that decision was an appeal of a bankruptcy order made by a District Judge in the County Court.
The Facts
The Facts
On 12 September 2012, the joint liquidators of a company brought claims for wrongful trading against its former directors, arguing that they knew (or ought to have concluded) before the date it entered liquidation that the company could not avoid insolvent liquidation. At first instance, Registrar Jones held that the directors were liable for wrongful trading and should pay compensation of £35,000. The directors appealed this decision.
The Decision