The defendant was the sole director of a company which went into liquidation. Almost six years after his appointment as liquidator, the claimant commenced proceedings seeking an order pursuant to s 212 Insolvency Act 1986 that the defendant contribute to the company’s assets on the basis that he had acted in breach of duty of care and skill and in breach of fiduciary duty owed to the company, which had resulted in the company’s deficiencies.

2002 was a seminal year for restructuring and insolvency professionals in the U.K. In November of that year, the eagerly anticipated Enterprise Act of 2002, which was intended to lay the statutory foundations for the “rescue culture,” received royal assent. Six months earlier, with considerably less fanfare, the EC Regulation on Insolvency Proceedings (EC No. 1346/2000) (the “Regulation”) was introduced throughout the EU (except Denmark). A clear understanding of how these twin pieces of law operate is crucial when reviewing a stakeholder’s options once a company becomes distressed.

On the 1 October 2007 new Practice Directions to the Civil Procedure came into force which will affect applications to court under the Companies Acts 1985 and 2006. In particular the rules in relation to schemes of arrangement under section 425 Companies Act 1985 are being amended to incorporate provisions in the Companies Act 2006 coming into force on 1 October 2007.

In Franses v Al Assad – Butterworths Law Direct 26.10.07 a freezing order was granted against the first respondent, principally in respect of £6.5m that formed part of the proceeds of sale of a property that had allegedly been owned by him. The first respondent applied to discharge the freezing order.

In Samsun Logix Corporation v Oceantrade Corporation; Deval Denizeilik VE Ticaret A.S. v Oceantrade Corporation and another – Butterworths Law Direct 18.10.07 the Defendant in both cases was subject to Chapter 11 proceedings in the US.

The lengthening of the restoration period for dormant companies may make a solvent liquidation an attractive option for some companies. James Stonebridge examines the impact of changes introduced under the Companies Act 2006.

The judgment of the Commercial Court in WASA and AGF v Lexington shows that a “follow settlements” clause in a reinsurance contract will not obviate the need for the reinsured to demonstrate that an inwards settlement falls within the terms and conditions of its outwards reinsurance. Partner Michael Mendelowitz reviews the judgment.

There is a prevailing view that landlords have not fared well in recent developments in insolvency law aimed at furthering a culture of corporate rescue. However, landlords should give a broad welcome to a recent case which sought to deal with the complicated question of what expenses should be considered as “expenses of an administration”.

Administrators to the rescue

In Lexi Holdings plc v Luqman and others – Butterworths Law Direct 17.8.07 the claimant company (the company), by its joint administrators, commenced proceedings against the first Defendant and his family, including the fifth Defendant. The company successfully applied without notice for freezing orders against the fifth Defendant.

The 4th session of the committee of governmental experts on Intermediated Securities met in May 2007 to continue negotiation of the draft Convention. The Convention deals primarily with the rights of account holders in relation to intermediated securities - securities held through financial intermediaries.