The High Court has ruled in the case of Goldacre (Offices) Limited v Nortel Networks UK Limited (in administration) [2009] that rent for premises that continue to be used for the beneficial outcome of an administration must be paid as an expense of the administration. This decision confirms that the court has no discretion in these circumstances and that it does not matter if only part of the premises are being used. This contrasts with the position where a landlord wishes to take action against a tenant in administration such as bringing forfeiture or injunction proceedings.
In certain non-EEA countries, if a firm becomes insolvent, the claims of depositors in the home country will be preferred above the claims of depositors outside the home country, including the depositors of the UK branch. The FSA is now consulting on proposals which will very significantly impact deposit-taking firms from non-EEA countries that operate national depositor preference regimes.
These firms will be required either:
On 16 September 2010 the UK Treasury published a consultation paper seeking views on its proposals for a new Special Administration Regime (SAR) for investment firms. The Consultation included draft regulations that will implement the SAR (the Draft Regulations).
The Consultation was prompted by the failure of Lehman Brothers in 2008 which posed (and continues to pose) serious challenges for insolvency regimes around the world.
On 1 May 2009, the administrators of Lehman Brothers International (Europe) ("LBIE") applied to the English High Court for directions on certain issues relating to "Client Money" (as defined in the UK Financial Services Authority's Client Assets Rules, the "CASS Rules") held by LBIE. LBIE was regulated by the FSA and was required to comply with the CASS Rules.
The Pensions Regulator has issued a statement setting out its approach to Financial Support Directions in insolvency situations. It follows the Court of Appeal's decision in Bloom v The Pensions Regulator (Nortel) in October 2011 that a liability arising from a Financial Support Direction (FSD), or a contribution notice (CN), issued to a company in administration or liquidation will, except in very limited circumstances, amount to an expense of that administration or liquidation. As such, it will rank very highly in the payment priority order, in particular rank
By a judgment handed down on 26 October 2010 in Sugar Hut Group Ltd & Ors v Great Lakes Reinsurance (UK) Plc & Ors [2010] EWHC 2636 (Comm), Mr Justice Burton in the Commercial Court held that insurers were entitled to avoid, for a material non-disclosure of a corporate re-organisation, a policy which could otherwise have covered losses arising from a fire at the premises of the insureds.
In August we reported that the Court of Appeal had expressed doubts as to whether the EAT in Oakland v Wellswood was right to suggest that pre-pack administrations could be insolvencies "begun with a view to liquidation" (so that TUPE does not apply to transfer employees).
- The 1992 ISDA Master Agreement: Court of Appeal provides clarity on payment obligations owed to insolvent counterparties
Lomas v JFB Firth Rixson Inc [2012] EWCA Civ 419
On 17 September, the Pension Regulator's Determinations Panel announced that it had issued a determination that six companies within the Lehman Brothers group (including the group's main operating companies in the UK as well as the US parent Lehman Brothers Holding Inc.) should provide financial support to the Lehman Brothers Pension Scheme. This followed a hearing on 8-9 September 2010.
In August we reported that the Court of Appeal had expressed doubts as to whether the EAT in Oakland v Wellswood was right to suggest that pre-pack administrations could be insolvencies "begun with a view to liquidation" (so that TUPE does not apply to transfer employees).