Knowing how much money you owe and are owed is critical when considering disputes with other parties. You need to consider whether a right of set-off exists between you and the other party.

When a company goes into administration, time does not stop running against its creditors' claims for the purposes of the Limitation Act 1980. This is different to where a company goes into liquidation as time does then stop running. The effect there is that the claim stays live whereas in an administration, once the limitation period has expired, the claim is time-barred.

Release provisions

The scope of the powers afforded to the security agent by the so called “release provisions” found in many intercreditor agreements employed in LBO deals has come under scrutiny recently. A number of restructurings have relied upon using the security agent’s powers to implement a restructuring and many others will have at least considered using them.

A group of senior lenders to European Directories SA, a Macquarie Group Ltd affiliate, have succeeded on their appeal to the English Court of Appeal in litigation with European Directories' mezzanine lenders over a €2billion loan restructuring plan for the company.

In January we posted on the impact of a case that ruled that landlords are able to claim rent as an expense of the administration when a tenant’s administrators are in occupation of all or part of a leasehold property.

Treasury makes banking insolvency rules: Treasury has made insolvency and administration rules covering building societies in England and Scotland and amended the English rules on banks in insolvency and administration and the Scottish rules on banking insolvencies. The English rules, among other changes, provide for the statement of proposals to be sent to FSA and FSCS and for the disapplication of set-off for protected deposits up to FSCS's statutory limit. The Scottish instruments apply to insolvencies of banks and building societies under the Banking Act 2009.

Following proposals Treasury made at the end of 2009, it has now published for consultation draft regulations setting up a special resolution regime for investment banks. The regime will apply to firms that meet all of the following three conditions:

The demise of Connaught's social housing maintenance business will have left a great deal of its local authority clients wondering what happens next when you need services to be undertaken and cannot afford to wait for the contractor's administration to pan out. Such clients need to be aware of what they can do in this situation under the contract. First, do some homework: who else is there in the marketplace? Is there a potential buyer of the insolvent firm's business and will any such purchase include the contract that it has with you?

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.

The underlying policy of the Insolvency Act 1986 is that all assets of an insolvent organisation must be made available for distribution amongst its creditors. However, the courts also have the power to prevent parties from contracting out of the statutory regime. This long established common law principle known as the anti-deprivation principle has been used by the courts over the years to strike down contractual provisions which attempt to do just that. The principle has received an airing in two recent High Court decisions.