A Sheriff has answered this question in the affirmative and given reasoning which will be helpful for trustees (under a trust deed) in considering whether to raise sequestration proceedings against the debtor.

Background

The Sheriff Court at Airdrie was asked in April 2019 to comment on the ability of a trustee under a trust deed to summarily apply for a debtor's sequestration in the case of David Mond v Craig Booth.

On 11 July 2019, HMRC published a policy paper discussing measures which are aimed at those  taxpayers who “unfairly seek to reduce their tax bill by misusing the insolvency of companies”.  This will be achieved by making directors and other persons connected to those companies jointly and severally liable for the avoidance, evasion or “phoenixism” debts of the corporate entity.

An explanatory note and draft legislation set out the conditions that must be satisfied in order to enable an authorised HMRC officer to issue a “joint liability notice” to an individual.

The transition from a family business to a family office can be treacherous. In a family business, the family is still involved in the day-to-day operations of the business and is literally “watching the store.” In a family office, the day-to-day operation of the family business and other financial investments and endeavors of the family may be delegated to experts outside of the family. This should create an enhanced level of professionalism and provide institutional safeguards and protections for the family, but can backfire.

The High Court decision in Burnden Holdings clarifies the law on retrospective attacks on the declaration of dividends.

SUMMARY

In certain circumstances, if a claim is proven, the defendant will be able to offset monies that are due to it from the claimant - this is known as set off.

Here, we cover the basics of set off, including the different types of set off and key points you need to know.

What is set off?

Where the right of set off arises, it can act as a defence to part or the whole of a claim.

Background

The case concerned royalty payments, which a creditor had a contractual right to receive, arising from iron ore produced at a mine in Sierra Leone.

The parent company of the Sierra Leonean mining company went into administration and administrators from PwC were appointed. The creditor's director called the administrators to stress the importance of bringing the royalty payments to the attention of a third party purchaser.

The administrators subsequently sold the mine, but did not make the purchaser aware of the royalty issue.

Seafood Shack Ltd v Alan Darlow [2019] EWHC 1567 (Ch)

A lease of restaurant premises was granted to a company that did not exist; there was no legal basis for correcting the lease, and the similarly-named company claiming rights was held to have none.

A breathing space scheme for individuals with problem debt will be implemented by 2021, the Treasury has confirmed. Draft regulations are expected later this year.

Lenders, loan servicers, debt purchasers and other acquiring funds can now begin taking steps to ensure that they are prepared for this change.

What is breathing space?

When can an insolvency practitioner pursue directors for declaring unlawful dividends?

Does an insolvency practitioner need to demonstrate that the directors knew, or ought to have known, that the dividend was paid unlawfully, or is it a strict liability issue?

Can director/shareholders rely on professionally prepared accounts to avoid liability?

In this week's update: directors implementing a management buy-out did not owe fiduciary duties to the other shareholders and a distribution was valid despite the relevant accounts not being in the usual format.

Directors did not owe fiduciary duty to shareholders

The High Court has held that the directors of a company did not owe a fiduciary duty to the company’s shareholders when implementing a management buy-out (MBO).

What happened?