On 24 March, HMRC published a summary of responses to the December consultation on Company Distributions, together with details of the Government's position on the issues raised. The December consultation was covered in my 3 February blog.
It is now clear that leases cannot be assigned to the tenant’s guarantor but serious issues arise out of the recent High Court case of EMI Group Limited v O&H Q1 Limited which specified that any lease assignment by a tenant to its guarantor is void. This means that the assignment is not effective, the lease is still held by the previous tenant and the intended assignee remains the guarantor of that previous tenant (and does not become the new tenant of the lease). In addition, be aware that the court’s decision applies retrospectively.
A company’s former administrators sought an order under the Insolvency Act 1986 that their remuneration and expenses should be payable out of a sum owed to the company from National Westminster Bank Plc (Natwest). The company entered into interest rate swaps with Natwest. After the swaps terminated, the company granted a fixed charge and debenture over its assets to a third party. Administrators were appointed and recorded costs of over £164,000 before the company was dissolved.
Conflict liquidators have been appointed by the High Court to a group of companies to investigate claims by the director that the companies’ bank had artificially distressed the companies and driven them into administration.
Background
The Angel Group of companies was founded by Ms Julia Davey. They owned residential and commercial properties which were rented out. The companies borrowed substantial amounts from Lloyds HBOS. After getting into financial difficulties, the bank appointed administrators from KPMG over them.
Section 262(1) of the IA 1986 provides that a debtor, creditor or nominee may apply to the court where: (a) a voluntary arrangement approved by a creditors’ meeting summoned under section 257 unfairly prejudices the interests of a creditor of the debtor, or (b) there has been some material irregularity at or in relation to such a meeting.
Welcome to the second article in this amazing series which looks at what you can do to try to extract money from a stubborn business debtor.
In the first article I looked at the potential benefits and detriments of issuing a County Court Claim. This time I will take a step back and look at what you could do prior to going to Court with your completed forms and a large cheque for the ever-growing Court fee. You can read this article here.
In order to promote a "rescue culture", TUPE says that where the transferring business is the subject of bankruptcy or insolvency proceedings instituted "with a view to the liquidation of the assets of the transferor", the employees will not transfer and any dismissals connected with the transfer are not automatically unfair.
Over a third of South West pubs (33%) and restaurants (38.4%) are at heightened risk of insolvency in the next 12 months, according to research by R3, the insolvency trade body.
However, agricultural businesses in the South West have demonstrated increased strength since this time last year with 17% of business at risk, representing a 9.6% decrease in the proportion since February 2015.
Alan Bennett, Chair of R3 in the South West and Partner at Ashfords LLP, comments:
Directors of a company are subject to certain duties under the Companies Act 2006. These duties are of obvious importance throughout their service as a director but some of them become particularly important during the period leading up to the insolvency of the company.
Litigation
A referral to the financial list!
In GSO Credit v Barclays Bank plc, the Commercial Court has given guidance on the interpretation of terms in, but not directly defined by, standard Loan Market Association (LMA) documentation which was used in the context of secondary trading of a commitment under a surety bonds facility.