If you’re a company director then circumstances can arise in which you decide to offer personal guarantees in support of a loan application or your pursuit of a line of credit. Where these guarantees are given, a lender will take some reassurance that they could pursue a director personally for debt repayments in the event of the company becoming insolvent.
The question of whether and under what circumstances a director might find themselves liable for their company’s debts upon entering insolvency can quickly become a very pressing concern.
A summary of recent developments in insurance, reinsurance and litigation law.
This Week's Caselaw
Essar v Norscot: Court confirms that arbitrators can award the costs of litigation funding/time limits for challenging a corrected award
I can show that a company is insolvent and that it is reasonably likely that the statutory purpose can be achieved. I can have an administration order, right? Eh, actually no.
Creditors issued applications for administration orders against two hotel-owning companies. The companies sold hotel rooms as leases, which provided for repurchase in certain circumstances.
Campbell v Peter Gordon Joiners Ltd (in liquidation) and another (2016) UKSC 38 considered whether an employee could successfully bring a civil action against a director of a company in liquidation for having failed to obtain appropriate employers' liability insurance.
C was an apprentice joiner employed by a company who suffered an injury at work whilst working with an electric saw. The company held employers’ liability insurance but it did not respond to C's claim as the policy excluded claims arising from the use of “woodworking machinery” powered by electricity.
An attempt to rely on Libyan sanctions as a reason not to pay a debt due fails.
The creditor lent money to a company, guaranteed by the debtor. There was no dispute that the debtor owed the debt, but the debtor contended that to pay it would contravene sanctions in place against Libya. He applied, albeit five months out of time, to set aside a statutory demand served on him for the debt.
At first instance, the Judge granted an extension of time in respect of the set aside application and also set aside the statutory demand, agreeing with debtor’s position.
Richards J provided directions on issues brought forward by administrators including:
- the treatment of interest
- in the context of various provable and non-provable debts.
The newest in the series of judgments to deal with interest arising out of creditors’ claims in the administration of Lehman Brothers International (Europe) (LBIE), this latest instalment sought to deal with six supplemental issues on which the administrators sought directions.
One interesting discussion related to:
This article was first published in The Gazette and the full article can be found online here.
As there is no clear definition in s.335A(3) of the Insolvency Act 1986 of what amounts to ‘exceptional circumstances’, the courts must apply the judgments of case law when determining whether to delay an order for possession and sale.
In an article for the LexisNexis ‘On the edge’ series of briefings, which highlight areas of legislation that may not fall with the everyday work of insolvency practitioners, Pat Saini and Séamas Gray offer guidance on immigration law.
Why is immigration law relevant to insolvency practitioners and their staff?
Legislation applicable generally
Gowling WLG's finance litigation experts bring you the latest on the cases and issues affecting the lending industry.